In example 6.2.4, and employee is able to contribute $123.25 to a 100% employer-matched 401(k), which is invested at an average APR of 6.3% compounded monthly. After 11 years, the employee retires.

Question

What is the size of the monthly contribution after the employer match is accounted for? PMT

Answer 1

In this scenario, the employee is contributing $123.25 to their 401(k) plan, with the employer matching 100% of that contribution. This means that the total monthly contribution, when accounting for the employer match, would be:

\[ \text{Total Monthly Contribution} = \text{Employee Contribution} + \text{Employer Match} \]

Since the employer matches 100%, the employer contribution will also be $123.25. Therefore, the total monthly contribution is:

\[ \text{Total Monthly Contribution} = 123.25 + 123.25 = 246.50 \]

So, the size of the monthly contribution after the employer match is accounted for is $246.50.