Question

Whitney’s employer contributes to the employees’ 401(k) plans as part of its benefit package. The company will match up to 6% of an employee’s salary. Suppose that Whitney’s salary is $2,800 per month, and she currently contributes 3% of her salary to her 401(k).

Whitney’s employer contributes __% of her salary to her 401(k), or $__ per month. To maximize her employer’s contributions, Whitney should contribute at least __% of her salary to her 401(k)

Answer 1

Whitney’s employer contributes _3_% of her salary to her 401(k), or $_84_ per month. To maximize her employer’s contributions, Whitney should contribute at least _6_% of her salary to her 401(k)

Explanation:

Matching works by the employer agreeing to match an employee's contribution to his or her 401 k. If the employee makes a contribution of a certain percentage of his or her salary, then the employer will make an equal deposit on an 100 % match.

Therefore, if the employee agrees to pay 100% of Whitney's contribution, up to 3% of her salary, then she should contribute 3% of her salary or to take advantage of her employers contribution.

Where are monthly salary is $2,800, then her employ contributes 3 % or $84 to her 401k. To take advantage of her employer's contribution,she has to contribute up to the matching percentage, that is 6% of her salary.

Answer 2

3 %, $84, 6%

Explanation:

Employer's contribution is equal to Employee's contribution for upto 6% of employee's salary. If employee's contribution goes above ^%, the employer will only contribute 6% of slaary.

The company's contribution when employee is contributing 3% of salary= 0.03 × 2800= 84

Whitney must contribute 6% of salary so that her employer also contribute 6% of her salary in her 401(k) plan. This is the maximum amount her company will contribute.