Question

Harry, age 45, works for a nonprofit organization that has adopted both a Section 403(b) and a Section 401(k) plan. In 2020, he contributes $9,000 to the Section 403(b) plan in before-tax elective deferrals. How much, if any, can Harry now contribute to the Section 401(k) plan in 2020?

Question options:

	$28,500
	$10,500
	$0
	$19,500

Answer 1

An employee can contribute to both the plans. But there is limit to it. For 2020, the contribution limit is $19,500. For those over 50, the catch-up contribution limit is $6,500.

In case of Harry, he has already deposited $ 9,000 to the Section 403(b) plan. The remaining amount he can deposit to Section 401(k) plan. The combined amount should not increase $ 19,500.

Section 401(k) plan = 19,500 - 9,000

                                = $ 10,500 Answer

Correct choice is option 2.