General Securities Representative (Series 7) Practice Exam

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What is the maximum contribution limit for a defined contribution plan?

$45,000
$51,000
$55,000
$60,000

The correct answer is: $51,000

The maximum contribution limit for a defined contribution plan for the tax year is determined by the Internal Revenue Service (IRS) and is subject to periodic adjustments for inflation. For the year 2023, the limit is set at $66,000 for individuals under 50 years of age and $73,500 for individuals 50 and older, due to catch-up contributions. The provided answer of $51,000 refers to the limit applicable in earlier years, specifically referring to the contribution limits before the adjustments were made for inflation. In this case, it highlights the importance of staying updated with IRS guidelines regarding contribution limits, as they can change from year to year. When discussing contribution limits for retirement plans, it is essential to distinguish between different types of plans and specific stipulations related to contributions made by employees and employers, as well as catch-up contributions for older workers.