Background Information: One of the most common forms of protection programs in use today are retirement...
Background Information:
One of the most common forms of protection programs in use today are retirement programs. While there are several different types of retirement programs available to employees in various industries, one of the most common and well-known retirement programs is the 401(k) plan. For this homework, you will be practicing calculations that help you explore both the 401(k) contribution and employer matching process.
Instructions:
You have just started a new job and are thrilled to learn that your new employer offers a 401(k) retirement plan to its employees. Your annual salary is $40,000. Assume the IRS allows you to contribute up to $24,000 to your 401(k). You’ve decided to contribute 7% of your annual salary to the plan.
Questions:
1. How much more money would you need to contribute to meet the maximum allowable contribution set forth by the IRS?
2. The company offers you a $.50 match for each dollar that you contribute between 2 and 5 percent of your annual salary. How much is the company match based on your 7% contribution?
3. Is this a defined benefit plan or defined contribution plan? Why?
Homework Answers
Question 1
Annual Salary = $40,000
Contribution = 7%
Annual Contribution = $2800
Maximum Contribution allowed = $24,000
Difference = 24000-2800 = $21,200
Question 2
Dollar contribution between 2% and 5%
2% contribution = $800
5% contribution = $2000
Total contribution between 2% and 5% = 2000-800 = $1200
Company's contribution = .5 of 1200 = $600
Question 3
Its a defined contribution plan. this is because the company is committing to contribute a particular sum of money but is not guaranteeing any future benefit.
Add Answer to:
Background Information:
One of the most common forms of protection programs in use today
are retirement...
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This question uses matlab R2018a
Retirement.m is ->
function [MyCont, CompCont, Total] = retirement(salary)
if salary <= 30000
MyCont = 0.1 * salary;
CompCont = 0.1* salary;
elseif salary <= 60000
MyCont = 0.1*salary;
CompCont = 0.1 * 30000 + 0.05 * (salary - 30000);
elseif salary <= 100000
MyCont = 0.1*60000 + 0.08 * (salary-60000);
CompCont = 0.1*30000 + 0.05*30000;
else
MyCont = 0.1*60000 + 0.08 * 40000;
CompCont = 0;
end
Total = MyCont + CompCont;
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8 Required information Matthew (48 at year-end) develops cutting-edge technology for SV Inc., located in Silicon...
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Your employer provides a 401(k) plan with a matching contribution of 7% of your salary if you put in at least 5% of your salary. If your monthly salary is $2250 and you contribute just enough to get the match, then how much money will be added to your account in total over one year? Your Answer:
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Required information Matthew (48 at year-end) develops cutting-edge technology for SV Inc, located in Silicon Valley In 2018, Matthew participates in SV's money purchase pension plan (a defined contribution plan) and in his company's 401(k) plan. Under money purchase pension plan, SV contributes 15 percent of an employee's salary to a retirement account for the employee up to the amount limited by the tax code. Because it provides the money purchase pension plan, SV does not contribute to the employee's...
This question uses matlab R2018a
Retirement.m is ->
function [MyCont, CompCont, Total] = retirement(salary)
if salary <= 30000
MyCont = 0.1 * salary;
CompCont = 0.1* salary;
elseif salary <= 60000
MyCont = 0.1*salary;
CompCont = 0.1 * 30000 + 0.05 * (salary - 30000);
elseif salary <= 100000
MyCont = 0.1*60000 + 0.08 * (salary-60000);
CompCont = 0.1*30000 + 0.05*30000;
else
MyCont = 0.1*60000 + 0.08 * 40000;
CompCont = 0;
end
Total = MyCont + CompCont;
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Required information The following information applies to the questions displayed below.) In 2019, Maggy (34 years old) is an employee of YBU Corp.YBU provides a 401(k) plan for all its employees. According to the terms of the plan, YBU contributes 50 cents for every dollar the employee contributes. The maximum employer contribution under the plan is 15 percent of the employee's salary (if allowed, YBU contributes until the employee has contributed 30 percent of her salary). (Use Exhibit 13-2) a....
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