What amount is withheld as a 401(k) elective deferral from a $2,000 regular wage at 5%?

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Multiple Choice

What amount is withheld as a 401(k) elective deferral from a $2,000 regular wage at 5%?

Explanation:
A 401(k) elective deferral is a pre-tax deduction from gross wages, so you multiply the wage by the deferral percentage to find the amount withheld. Here, 5% of $2,000 is 0.05 × 2,000 = $100. Therefore, $100 is withheld as the 401(k) deferral. For context, this reduces the wages subject to federal income tax in the year of the deferral. (Other percentages would yield different dollar amounts, e.g., 2.5% would be $50, 7.5% would be $150, and 10% would be $200.)

A 401(k) elective deferral is a pre-tax deduction from gross wages, so you multiply the wage by the deferral percentage to find the amount withheld. Here, 5% of $2,000 is 0.05 × 2,000 = $100. Therefore, $100 is withheld as the 401(k) deferral. For context, this reduces the wages subject to federal income tax in the year of the deferral. (Other percentages would yield different dollar amounts, e.g., 2.5% would be $50, 7.5% would be $150, and 10% would be $200.)

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