Hector's Employer Has a Qualified Pension Plan to Which It

question 81

Multiple Choice

Hector's employer has a qualified pension plan to which it contributes 6% of his gross salary. Hector's current annual salary is $50,000. The pension plan also earns $2,500 during the current year on contributions made to the plan on behalf of Hector. What is Hector's gross income from these transactions for the current year?

• A)$50,000
• B)$52,500
• C)$53,000
• D)$55,500

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Definitions:

Americans with Disabilities Act

A legal statute designed to prevent discrimination towards people with disabilities in various public sectors.

Cafeteria-style Plans

Flexible employee benefits plans allowing workers to choose from a variety of pre-tax benefits options, similar to selecting food in a cafeteria.

HMO

Health Maintenance Organization, a type of health insurance plan that requires members to access healthcare services from a specific network of providers.

PBGC

Pension Benefit Guaranty Corporation; a federal corporation created to protect the retirement incomes of workers in private-sector defined benefit pension plans in the United States.