Example 4-1

Carl Jamison, an employee for the Scharman School, belongs to a tax-deferred retirement plan to which he contributes 3 percent of his pay which is matched by the school. His biweekly pay is $2,500. Because of the deferral (3% $2,500 = $75), $2,425 is subject to federal income tax withholding.

George Clausen (age 48) is employed by Kline Company and is paid an annual salary of $42,640. He has just decided to join the company's Simple Retirement Account (IRA form) and has a few questions. Answer the following for Clausen: Round your answer to the nearest cent.

a. What is the maximum that he can contribute into this retirement fund?

$1279.20

b. What would be the company's contribution?

$????????

Note: For items c. & d. below, round interim amounts to two decimal places. Use these values in subsequent computations then round final answer to two decimal places.

c. What would be his weekly take-home if he contributes the maximum allowed retirement contribution (married, 2 allowances, wage-bracket method, and a 2.3% state income tax on total wages)?

Click here to access the Wage-Bracket Method Tables.

$??????????

d. What would be his weekly take-home pay without the retirement contribution deduction?

$694.41

I know the answer of ( a and d)

I need only( b and c)

Thanks