A non-profit organization offers a 5% salary contribution to John's 403b plan and matching 5% when John contributes 5% of his/her salary. John makes $56,000 a year.
-What is John's effective salary reduction if he is in the 25% tax bracket?

Question

Quizplus · Accepted Answer

John contributes 5% of his salary, which is $2,800. However, this contribution is pre-tax, so the effective reduction in his take-home pay is $2,800 * (1 - 0.25) = $2,100.

A Non-Profit Organization Offers a 5% Salary Contribution to John's