Danielle puts 8 percent of her paycheck in a 401(k) plan administered by her employer. Danielle earns $55,000 per year and is in the 28 percent tax category. What annual tax savings does she get from her contribution? If her employer matches

contributions on the first 5% of her salary dollar for dollar and the second 3% 50 cents on the dollar, how much will her employer put into her account this year? (Show all work.)

Contribution = 0 08 × $55,000 = $4,400
Tax savings = $4,400 × 0.28 = $1,232

0.05 × $55,000 = $2,750 fully matched plus another $825 (0.03 × $55,000 × 50%). Her employer would put $3,575 ($2,750 + $825 ) into her account this year.

REJ: Please see the section "Pension Plans and Retirement Programs" for more information.