Now, let's calculate the employer's matching contributions for three employees, Amanda, Shiyu, and Onkar, using each method. Amanda carns $35,000 annually and does not contribute anything to the 401(k) plan. Shiyu carns $125,000 annually and contributes 7 percent of pay to the 401(k) plan. Onkar earns $80,000 annually and contributes 2 percent of pay, . X Full match: The employer fully matches an employee's contribution to the 401(k) account up to an amount set by law. For illustrative purposes, an employee earning $50,000 annually contributes $2,000 to her 401(k). Then, the company's matching contribution equals $2,000. Fixed dollar match: The employer deposits $1 for every $1 the employee contributes up to a specified limit, for instance, 5 percent of pay. One employee contributes 3 percent of her $100,000 pay equaling $3,000: (3 percent x $100,000). The employer contributes the same amount. Another employee contributes 10 percent of his $100,000 pay equaling $10,000: (10 percent x $100,000). In this case, the company deposits $5,000: (5 percent x $100,000) because the plan specifies a 5 percent matching contribution maximum. Variable dollar match: The employer's contribution decreases as an employee's contribution increases. For example, an employer might deposit $1 for every $1 on the first 3 percent of pay contributed by the employee, and 50 cents per dollar on the next 3 percent of pay. An employee who earns $100,000 annually contributes 6 percent to the 401(k) plan, equaling $6,000: (6 percent x $100,000). The employer contributes a total of $4,500: [($1 (3 percent $100,000))+ ($0.50 x (3 percent x $100,000))]. 9-11 A. Amanda 0$ No Contribution Made B. Shiyu $125,000* .07= $8,750 C. Onkar $80,000* .02 =$1,600 9-12 A. Amanda $0 No Contribution Made B. Shiyu $8,750 * .75 =$6,562.50 C. Onkar $1,600 * .75 =$1,200 Total Contribution Amanda 0$ Shiyu $8,750 + $6,562.50 = $15,312.50 Onkar $1,600+ $1,200 + $2,800 9-13 Amanda 0$ Shiyud Onkar 3 Ch 10.docx