QuestionCalculate Jamie's maximum 401k contribution and the company match based on a salary of \$54,000 with a 12\% contribution limit.

Studdy Solution

STEP 1

Assumptions1. Jamie's annual salary is $54,000. The company matches up to4% of Jamie's salary3. Jamie can contribute up to12% of his salary to his401k

STEP 2

First, we need to find out how much Jamie's employer will contribute. We can do this by multiplying Jamie's salary by the company's match rate.
$Employer\, contribution = Salary \\times Employer\, match\, rate$

STEP 3

Now, plug in the given values for the salary and the employer match rate to calculate the employer contribution.
$Employer\, contribution = \$54,000 \\times\%$

STEP 4

Convert the percentage to a decimal value.
$4\% =0.04$ $Employer\, contribution = \$54,000 \\times0.04$

STEP 5

Calculate the employer contribution.
$Employer\, contribution = \$54,000 \\times0.04 = \$2,160$

STEP 6

Next, we need to find out how much Jamie can contribute to his401k. We can do this by multiplying Jamie's salary by the maximum contribution rate.
$Jamie's\, contribution = Salary \\times Maximum\, contribution\, rate$

STEP 7

Now, plug in the given values for the salary and the maximum contribution rate to calculate Jamie's contribution.
$Jamie's\, contribution = \$54,000 \\times12\%$

STEP 8

Convert the percentage to a decimal value.
$12\% =0.12$ $Jamie's\, contribution = \$54,000 \\times0.12$

STEP 9

Calculate Jamie's contribution.
$Jamie's\, contribution = \$54,000 \\times.12 = \$6,480$

STEP 10

Now that we have both the employer contribution and Jamie's contribution, we can find the total amount that will be added to Jamie's401k in a year. This is the sum of the employer contribution and Jamie's contribution.
$Total\,401k\, contribution = Employer\, contribution + Jamie's\, contribution$

STEP 11

Plug in the values for the employer contribution and Jamie's contribution to calculate the total401k contribution.
$Total\,401k\, contribution = \$,160 + \$6,480$

STEP 12

Calculate the total401k contribution.
$Total\,401k\, contribution = \$2,160 + \$6,480 = \$8,640$ Jamie's401k will increase by $8,640 in a year.

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