Question

Lou’s gross annual income is $41,028. He is paid biweekly and has 4% deducted from his paychecks for his 401(k). His employer matches his deduction, up to 3%.

How much is deposited into Lou’s 401(k) each payday?

Answer 1

$110.46

Explanation:

Answer 2

Amount deposited into Lou's 401(k) each payday is $119.665

Explanation:

Here we have gross income annual $41028

Payment frequency = Every two weeks

Number of payments (Pay days per annum) = 12 × 2 = 24 payments annually

Amount payed on pay day = $41028/24 = $1709.5

Amount deducted from Lou's paycheck on payday = 4% of Pay = 0.04×$1709.5

∴ Amount deducted from Lou's paycheck on payday = $68.38

Amount employer matches = 3% of pay = 0.03 × $1709.5 = $51.285

Therefore, amount deposited into Lou's 401(k) each payday = $68.38 + $51.285

Amount deposited into Lou's 401(k) each payday = $119.665.