What is the maximum tax-deferred contribution that can be made to a Section 401(k) plan by an employee under age 50 in 2021?

a. $56,000

b. $19,000

c. $20,000

d. $19,500

e. $26,000

Answer: D. $19,500

One of the more popular qualified retirement plans is the Section 401(k) plan, which permits an employee to choose to receive a direct payment of compensation in cash or to defer the amount through an employer contribution on behalf of the employee to a profit sharing or stock bonus plan. In all 401(k) plans, contributions are limited in two ways.