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FINRA Series 7

Category - Series 7

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Bubba Corporation has a profit sharing plan. The company president, Bubba, is receiving the maximum plan contribution amount. The corporation has one other employee, who is eligible for the plan. If this person earns $12,000 per year, how much must be deposited in the plan for the employee?

$6,000
$3,000
$1,800
$12,000

Explanation

Answer: B - $3,000. The maximum contribution is 25% of compensation. That percentage of $12,000 is $3,000.

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