Question

QUESTION 1 of 10: Your employees have the opportunity to participate in a 401K plan. Each employee can contribute up to 5% of their pay
into the plan. The employer will match 50% of an employee's contribution. If an employee contributed all 5% allowable from their $55,000 per
year salary, how much must the employer contribute?
ОООО
a) $1,100
b) $1,375
c) $2,750
d) $27,500

Answer 1

The amount that the employer must contribute is: b) $1,375.

First step is to calculate the amount the employee contribution.

Employee contribution=5%×$55,000

Employee contribution=$2,750

Second step is to calculate employer contribution

Since the employer will match 50% of an employee's contribution based on 401K plan. The employer contribution will be:

Employer contribution= 50%×$2,750

Employer contribution=$1,375

Inconclusion the amount that the employer must contribute is: b) $1,375.

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