Paul, age 37, participates in a Section 401(k) plan which allows employees to contribute up to 15 percent of their salary. His annual salary is $125,000 in 2020. What is the maximum he can contribute, on a tax-deferred basis under a salary reduction agreement, to this plan?
a. $24,000
b. $20,500
c. $18,500
d. $18,750
e. None of the above