question archive The employee and employer have contributed a total of $75,000 and $18,750 respectively to a 401k
The employee and employer have contributed a total of $75,000 and $18,750 respectively to a 401k
Subject:AccountingPrice:9.82 Bought3
The employee and employer have contributed a total of $75,000 and $18,750 respectively to a 401k. The employer contribution is 40% vested. What is the maximum amount this employee may borrow from their 401k?
(Round to the nearest whole dollar.)
(The answer is not 18750, 82,500, 9375.)
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$37,500
Step-by-step explanation
Vested amount = (75000+18750)*40% = $37,500
The maximum amount a participant may borrow from his or her plan is 50% of his or her vested account balance or $50,000, whichever is less. An exception to this limit is if 50% of the vested account balance is less than $10,000: in such case, the participant may borrow up to $10,000.
