What is the maximum employee contribution to a 401(k) for the year 2016?

The maximum employee contribution to a 401(k) plan for the year 2016 is accurately reflected by the amount of $18,500. This limit applies to the contributions that employees can make to their 401(k) accounts through salary deferrals.

It's important to note that this figure is established by the Internal Revenue Service (IRS) and is subject to annual adjustments for inflation. For the tax year 2016, the contribution limit was set at this amount. Additionally, individuals who were 50 years of age and older were allowed to make additional catch-up contributions, enabling them to contribute beyond the standard limit, which is designed to help them save more effectively for retirement.

The other choices represent either earlier limits or incorrect figures related to 401(k) contributions. For example, the $5,500 figure relates to the contribution limits for Individual Retirement Accounts (IRAs), while the amounts $15,500 and $17,500 were relevant for earlier years and are not applicable for 2016. Understanding these limits is crucial for payroll professionals to ensure compliance and accurate payroll processing.