Question

Mr. Reed's gross annual income is $55,690. He is paid weekly and has 9% deductedfrom his paychecks for his 403(b). His employer matches his deductions, up to 2%.How much is deposited into Mr Cree's 403(b) each pay day? Round answer to thehundredths. If the answer doesn’t have a hundredths place then use zeros so that it does

Answer 1

EXPLANATION:

We are given the gross annual income of Mr Reed as $55,690.

Gross income means no deductions have been made yet. The amount is still untouched as it were.

Mr Reed is paid weekly, therefore, his weekly gross income would be;

$\begin{gathered} 52\text{ }weeks\text{ }in\text{ }a\text{ }year: \\ Hence; \\ Gross\text{ }annual\text{ }income=55690 \\ Gross\text{ }Weekly\text{ }income=\frac{55690}{52} \\ Gross\text{ }weekly\text{ }income=1070.96 \end{gathered}$

If his gross annual income is given as shown above and the deduction for 403(b) retirement plan is 9%, then take note of the following;

$\begin{gathered} Employee\text{ }Contribution=9\% \\ Employer\text{ }Contribution=2\% \\ Total\text{ }contribution\text{/}deduction=11\% \end{gathered}$

From the information above we can determine how much is deposited

into Mr Reed's 403(b) account each pay day, that is every week.

$\begin{gathered} Gross\text{ }weekly\text{ }income: \\ Gross=1070.96 \\ Net=1070.96-(1070.96\times11\%) \end{gathered}$$Net=1070.96-(1070.96\times0.11)$$Net=1070.96-117.8056$$Net=953.1544$

The amount deducted from his salary each pay day is the percentage of his weekly paycheck and that is $117.8056.

We now round this amount to the nearest hundredths and we'll have;

ANSWER:

$\begin{gathered} Deposit\text{ }into\text{ }403(b): \\ Amount=117.81 \end{gathered}$