Samantha Montgomery (age 42) is employed by Canon Company and is paid a salary o
ID: 2539296 • Letter: S
Question
Samantha Montgomery (age 42) is employed by Canon Company and is paid a salary of $62,430. She has just decided to join the company's Simple Retirement Account (IRA form) and has a few questions. Answer the following for Montgomery:
3.a. What is the maximum that she can contribute into this retirement fund? $____________
3.b. What would be the company's contribution? $_____________
3.c. What would be her weekly take-home pay with the retirement contribution deducted (married, 2 allowances, wage-bracket method, and a 2.3% state income tax on total wages)? Use the Wage- bracket tables in Publication 15. $______________
3.d. What would be her weekly take-home pay without the retirement contribution deduction? $____________
Explanation / Answer
3a.
The maximum amount than an employee can contribute in SIMPLE IRA shall not exceed $12500. Hence, Samantha Montgomery cam contribute up-to $12500 from her salary to the Simple IRA.
3b.
Generally an employer require to contribute an equal amount as contributed by the employee thus, the company needs to contribute an equal amount as contributed by Samantha Montgomery.
3c.
Annual salary (gross)
62430
Weekly salary
Annual salary (gross)
62430
Number of weeks in a year
52
Weekly salary
1200.577
Less: Weekly contribution in IRA
240.3846
960.1923
Less: State income tax @2.3% on total wages
27.61327
Weekly take home pay
932.579
3d.
Annual salary (gross)
62430
Weekly salary
Annual salary (gross)
62430
Number of weeks in a year
52
Weekly salary
1200.577
Less: Weekly contribution in IRA
0
1200.577
Less: State income tax @2.3% on total wages
27.61327
Weekly take home pay
1172.964
Annual salary (gross)
62430
Weekly salary
Annual salary (gross)
62430
Number of weeks in a year
52
Weekly salary
1200.577
Less: Weekly contribution in IRA
240.3846
960.1923
Less: State income tax @2.3% on total wages
27.61327
Weekly take home pay
932.579
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