General Education Development (GED) Practice Exam

How much does Scott's company provide as a 401k match after one year if he contributes 4% of his paycheck?

1. $160

2. $80

3. $40

4. Cannot be determined

The correct answer is: $80

To determine the amount Scott's company provides as a 401k match after one year given that he contributes 4% of his paycheck, we need to calculate the match based on the percentage contribution. If Scott contributes 4% of his paycheck to his 401k, the company typically matches a certain percentage of that contribution. In this scenario, if we assume the company has a policy that matches 50% of the employee’s contribution, then for every dollar Scott puts into the 401k, the company adds an additional 50 cents. Let’s suppose Scott earns an annual paycheck of $40,000. Therefore, 4% of his salary is $1,600 (0.04 * $40,000). If the company matches 50% of this, the match would be $800 (which is 50% of $1,600). The specific match amount can vary depending on the company's policies, such as how they calculate the match and what percentage they utilize. In this case, if it turns out that Scott's company matches 5%, then it would be $80 (5% of $1,600). Thus, the amount of $80 as a match after one year corresponds to a company policy