Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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What is the maximum contribution that can be made annually to an individual’s 401(k) plan?

$17,500
$18,500
$21,000
$25,000

The correct answer is: $18,500

The maximum annual contribution limit to an individual’s 401(k) plan is $22,500 for 2023, with an additional catch-up contribution of $7,500 for individuals aged 50 and over, allowing those eligible to contribute a total of $30,000. Given the answer choices, it is important to note that the limits may have been updated in previous years. In this case, the answer provided states $18,500, which reflects the maximum limit for 401(k) contributions set for the previous year, 2018, 2019, 2020, and potentially 2021. As the limits can change annually based on inflation and adjustments made by the IRS, it is crucial to verify the current contribution limits according to the year in question. In summary, the answer may be viewed correctly in historical context, so it is essential to contrast memories of past limits with the current schedule of contributions to ensure accuracy in understanding how contribution limits apply to 401(k) plans.