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Question 4

“Simple arithmetic shows how employer matches increase your total annual retirement savings. Suppose you earn $85,000 per year and contribute 6% of pay to your 401(k). Your employer matches 50% of your contribution, but only up to that same 6% of your salary. Calculating the match is a two-step process: (1) compute your 6% contribution from salary, (2) apply the 50% match rate to that contribution. This practical question checks you can translate percentage rules into actual dollars — a useful skill when estimating how much an employer adds annually. (Calculation shown for clarity: 85,000 × 0.06 = 5,100; match = 0.5 × 5,100 = 2,550.)”

If you earn $85,000 and contribute 6% while your employer matches 50% up to 6%, what is the employer’s annual contribution?

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By Wise Wallet

Wells Fargo was founded in 1852 and used stagecoaches to carry gold, mail, and cash across the American West.