Multiple Choice $5-16$

Small Business and Self$-$Employed Retirement Plans $($LO $5\mathrm{.}4)$

Paul, age $37,$ participates in a $401$ k plan which allows employees to contribute up to $15$ percent of their salary. His annual salary is $$125,000$ in $2023.$ What is the maximum he can

contribute, on a tax$-$deferred basis under a salary reduction agreement, to this plan?

a$.$ $$20,500$

b$.$ $$18,750$

c$.$ $$24,000$

d$.$ $$18,500$

e$.$ None of these choices are correct.