Question

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 her salary dollar for dollar and the second 5% 50 cents on the dollar, how much will her employer put into her account this year? $

Answer 1

Annual money for 401(k) plan ($55,000*8%)	4400
It is given in the question that her annual income is 55,000 and she contributes 8%
Annual Tax Saving(4400*28%)	1232
On investment in 401(k) plan, you can save taxes
Employer's contribution
First 5% = 55,000*5%	2750
Next 5%(only .50 cents per cents) = 55,000*5%*.50	1375
Total	4125
Hence, employer contribution is $4125

NOTE : The question says next 5%. I dont know if an employers make investment greater than what employee makes as the person is contributing 8% and employer is contributing 10% according to question. But in case you find their is some discrepency in the question or you want answer for 5% + 3%, you can always comment in the section.

If you have any doubt, you can ask me in the comment section.