How much will your take home pay be reduced

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Reference no: EM131130176

Your employer offers a 401k that you can invest in as an employee of the firm. If you put in 3% of your pre-tax income (listed in question 1.a.), your employer will match 3%. a. Assuming you put in the full 3% during your first year of employment, how much will your take home pay be reduced? In other words, what is the difference between your take-home pay without the 401k contribution (from part 1.b.iv.) and your take-home pay after a 401k contribution? b. If you do not earn any return on the investment during that first year, how much will you have saved in total in your 401K account (counting your employer contribution and your contribution)? c. Assume now that you earn 8.8% per year on your total contribution (from part 2.b.), how much will that one year of savings grow into in 40 years? d. How much would the account be worth if you contribute 3% per year, and your employer matches 3%, for 40 years (assuming you earn the same salary and 8.8% return)?

Reference no: EM131130176

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