Question

Jahwana works for a large corporation with a 401(k) retirement plan. The company matches dollar for dollar the first 5% of the employee's salary contributed to the 401(k). Jahwana currently earns $40,000 in gross salary and she currently contributes 15% of her salary into her 401(k). How much money in dollars is the total contribution to her account (her contribution plus the employer match) every year?

Answer 1

$8,000

Step-by-step explanation:

Total contribution to Sophia's account = Jahwana's contribution + Company's contribution

Jahwana's contribution ( $ 40,000 * 15% ) = $ 6,000

Company contribution( $ 40,000 * 5% ) = $ 2,000

( $ to $ restricted to 5% of employee's salary)

Total contribution to Jahwana's account = $ 8,000.00

Answer 2

$8,000

Step-by-step explanation:

Jahwana earns $40,000:

her 401k contributions = 15% x $40,000 = $6,000

Jahwana's employer contributes $1 per $1 that she contributes but only up to 5%, so her employee's 401k contribution = 5% x $40,000 = $2,000

total annual contribution = $6,000 + $2,000 = $8,000