If an employee earning $75,000 per year annually for 20 years contributes 6% to their 401(k) plan and the employer matches 3%, plus contributes $5000 to a Roth IRA annually for 20 years, how much money will the employee have at the end of 20 years assuming all funds are invested at 6% per annum?

Question

Quizplus · Accepted Answer

The correct answer is A because the employee will have contributed $30,000 (6% of $75,000 for 20 years) to their 401(k) plan, and the employer will have contributed $15,000 (3% of $75,000 for 20 years) plus $100,000 ($5,000 per year for 20 years) to the Roth IRA. The total amount contributed will be $145,000. Assuming a 6% annual return, the total value of the investments at the end of 20 years will be $432,231.

If an Employee Earning $75,000 Per Year Annually for 20