Income - Taxation of Retirement Plans

Question 1

What is the maximum contribution that can be made to a 401(k) plan to reduce an employees taxable salary?

Answer 1

Allows voluntary employee contributions to reduce taxable salary up to a maximum of $17,500 for 2014.

Question 2

What is the maximum contribution an individual can make to a Traditional or Roth Individual Retirement Account (IRA)?

Answer 2

Lower of $5,500 or earned income for 2014.

Question 3

What deductions are allowed for a Roth Individual Retirement Account (IRA)?

Answer 3

Zero. Deductions are never allowed for Roth IRA contributions.

Question 4

What is the tax treatment of contributions of salary to “qualified” pension plans?

Answer 4

Deferred until distributions are made from the pension.