Question

Owusu has decided to start contributing to his 401(k) plan at work. He will contribute 6% of his weekly salary and his company will match 3% of his salary. Calculate the total amount of contributions that will be made this year (52 weeks) to Owusu’s 401(k) account if his salary is $700 per week.

Answer 1

Owusu will contribute a total of $3276 annually to his 401(k), with $2184 coming from his contributions and $1092 from his employer's match.

Step-by-step explanation:

Owusu's total annual contribution to his 401(k) will be the sum of his own contributions and his employer's match. To calculate his personal contribution, first, we determine 6% of his weekly salary:

• Personal contribution per week: 6% of $700 = $42
• Total personal contribution per year: $42 × 52 weeks = $2184

Next, we calculate his employer's contribution:

• Employer match per week: 3% of $700 = $21
• Total employer contribution per year: $21 × 52 weeks = $1092

Finally, adding both contributions together gives us the total contributions for the year:

• Total annual contributions: $2184 (personal) + $1092 (employer) = $3276

Owusu's total annual contribution to his 401(k), including both his own contributions and his employer's match, amounts to $3276.