Question

1. You are married and earn a 2022 pre-tax income of $113,000. You work for a company that offers a 100% match on your 401(k) up to your first 3.5% of your income. You decide to pay taxes on $2,500 of your income and contribute the remainder of this money to your Roth 401(k). How much will be in your Roth 401(k) account in 20 years if you earn a 8.5% interest rate, but pay a 0.08% expense ratio?
   1. $0
   2. $8,597.03
   3. $9,822.51
   4. $12,592.97
   5. None of the abov

Answer 1

Solution:

Annual Income	113,000
3.5% of Income	3,955
Less: Pay taxes on	2,500
Investment (Remainder)	1,455
Return	8.50%
Expense ratio	0.08%
Net Return (8.50% - 0.08%)	8.42%
Period	20 Years

Amount after 20 Years = Investment * (1 + Net return %)^Period

= 1,455 * (1.0842)^20

= $7,329.11

So, Option "e. None of the above" is correct