Question

Assume your employer matches 50% of your contributions in the 401(k) plan up to 6% of your annual salary. If your salary is $80,000, what is the total (employer and employee contributions) in your account balance after 3 years of employment?

Answer #1

To maximize the benefit of employer contribution, you should contribute entire 6% of your annual salary.

employee contribution = Annual salary*contribution rate = $80,000*6% = $4,800

employer contribution = Annual salary*contribution rate*maximum cap rate = $80,000*6%*50% = $4,800*50% = $2,400

so, total balance in one year will be: employee contribution + employer contribution = $4,800 + $2,400 = $7,200

total (employer and employee contributions) in your account balance after 3 years of employment = annual total contribution*no. of years = $7,200*3 = $21,600

1. Your employer provides a 401(k) retirement plan and matches
100% of your contributions up to 5%. Your annual income is $54,000
and you expect to earn an annualized 8.0% return on your
investment. What is the value of your 401(k) if you contribute 5%
of your annual income after 30 years? What is the value if the
return on investment is at a 10.0% annualized rate? How much of a
difference would it be if you stopped making contributions...

An employee contributes $15,400 to a 401(k) plan each year, and
the company matches 10 percent of this annually, or $1,540. The
employee can allocate the contributions among equities (earning 12
percent annually), bonds (earning 6 percent annually), and money
market securities (earning 4 percent annually). The employee
expects to work at the company 20 years. What is the terminal value
of the 401(k) plan if the employee contributes 50% to Equities, 45%
to Bonds and 5% to Money market...

Axe company sponsors a 401(k) profit sharing plan with no
employer match, but the company did make noncontributory employer
contributions because the plan was top-heavy. Jack quit today after
six years working for Axe and has come to you to determine how much
of his retirement balance he can take with him. The plan uses the
least generous graduated vesting schedule available. What is Jack’s
vested account balance if he has been a participant for 57
months?
EMPLOYER EMPLOYEE
CONTRIBUTIONS ...

Danielle puts 8 percent of her paycheck in a 401(k) plan
administered by her employer. Danielle earns $55,000 per year and
is in the 28 percent tax category. Answer the following questions
by filling integers into the blanks. Round to the nearest integer
and do not put “thousand separators.”
a. Her annual contribution was $ .
b. What annual tax savings does she get from her contribution? $
.
c. If her employer matches contributions on the first 5% of...

Ann Sacks has an annual salary of $30,000. Her employer
established a Section 401(k) plan, providing that she may invest up
to 12 percent of her salary in the plan. The employer will match
the first five percent. This year Ann took an eight percent salary
reduction.
(a.) What is Ann's gross income from compensation?
(b.) What amount is subject to social security tax?
(c.) What is the employer's compensation deduction?
(d.) What is Ann's total increase in her Section...

Your employer offers a 401(k) plan with a 45% match, and you
set a goal of retiring in 32 years with an amount of money which
has the same buying power that 1.4 million dollars has today. If
the account earns an annual interest rate of 1.7% and the expected
annual rate of inflation is 1.9%, how much should you contribute
each month to the 401(k)?

Your company sponsors a 401(k) plan into which you deposit 10
percent of your $89,000 annual income. Your company matches 50
percent of the first 5 percent of your earnings. You expect the
fund to yield 8 percent next year. Assume you are currently in the
31 percent tax bracket. a, What is the total annual investment in
the 401(k) plan at year-end? b, What is your one-year return?

Your employer offers a 401(k) plan with a 28% match, and you set
a goal of retiring in 26 years with an amount of money which has
the same buying power that 1.5 million dollars has today. If the
account earns an annual interest rate of 3.7% and the expected
annual rate of inflation is 1.2%, how much should you contribute
each month? Round your answer to the nearest dollar.

Assume you are 25 and earn $32,500 per year, never expect to
receive a raise, and plan to retire at age 55. If you invest 5
percent of your salary in a 401(k) plan returning 6 percent
annually, and the company provides a $0.50 per $1.00 match on
your contributions up to 3 percent of salary, what is the
estimated future value of your 401(k) account? Once you retire,
how much can you withdraw monthly if you want to deplete...

Question 4. Jill earns $75,000 per year. Her employer offers
both a Roth and traditional 401(k) plan. Assume Jill is less than
50 years old. If she contributes the maximum allowable, how much
will her taxable income be if she contributes to the traditional
401 (k)? If instead Jill contributes the maximum allowable, how
will her taxable income be if she contributes to a Roth 401
(k)?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 4 minutes ago

asked 7 minutes ago

asked 8 minutes ago

asked 8 minutes ago

asked 8 minutes ago

asked 8 minutes ago

asked 9 minutes ago

asked 9 minutes ago

asked 11 minutes ago

asked 11 minutes ago

asked 11 minutes ago