Qualified Retirement Plans $($LO $9\mathrm{.}8)$

In $2023,$ Kwon Ah Bo is an employee at Sungsam Industries. Kwon is paid wages of $$50,000$ and is also a participant in the Sungsam $401($k$)$ plan. Kwon contributes $6$ percent of her salary to the $401($k$)$ and Sungsam matches the first $3$ percent of employee contributions.

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a$.$ Describe how Kwon will be taxed on her $6-$percent contribution to the $401($k$)$ plan in $2023.$

Kwon will contribute fill in the blank $1$ of $2$$

to a qualified plan and thus

pay tax on that amount currently.

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b$.$ Describe how Kwon will be taxed on the $3-$percent match provided by Kwon$$s employer and contributed to the $401$k plan.

Kwon fill in the blank $1$ of $3$

be taxed currently on the employer match of fill in the blank $2$ of $3$$

$.$ Note that total employee and employer contributions fill in the blank $3$ of $3$

the $2023$ maximum of $$22,500$ for $401($k$)$ plan contributions.

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c$.$ Compute the amount of wages subject to $($i$)$ income tax and $($ii$)$ FICA taxes.

Line Item Description Amount

Income tax $fill in the blank $55$fb$9$d$008$f$93$f$99\_1$

FICA taxes $fill in the blank $55$fb$9$d$008$f$93$f$99\_2$

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d$.$ Describe how Kwon will be taxed on withdrawals from the $401($k$)$ assuming she reaches the age of $59(1)/(2).$

Distributions from the $401($k$)$ plan to Kwon at age $59(1)/(2)$ or later

taxed as ordinary income when distributed whether from employee or employer contributions or from the earnings of the plan.