Chartered Retirement Planning Counselor (CRPC) Practice Exam 2026 - Free CRPC Practice Questions and Study Guide

In a money purchase plan, employers can contribute a specified percentage of each participant's compensation, up to certain limits established by the IRS. For the relevant tax year, the maximum employer contribution limit is generally 25% of the participant's compensation or a specified dollar limit, which is subject to annual cost-of-living adjustments.

In this case, with the participant's compensation being $220,000, the calculation for the employer's deductible contribution would proceed as follows:

1. The maximum contribution limit is capped at 25% of an employee's compensation for money purchase plans.

2. Therefore, you would take 25% of $220,000, which equals $55,000.

3. However, specific legislation might have a dollar limit on contributions for the tax year, which in this instance is accounted for based on previous years limits.

The deduction limits and details can vary, but when looking at an employer's contribution based on the provided figures, the amount that is deductible aligns closer to established IRS limits, thereby validating this approach. Thus, the correct answer focuses on the contribution that fits within these regulations, and in this scenario, the calculated contribution amount acknowledges IRS stipulations, concluding with the limit of $52,500 as the