To solve this question, we shall follow these steps:
1. Determine the percent of your salary that your employer is willing to match.
2. Calculate the actual dollar amount that represents 5% of your salary.
3. Compare the amount you are contributing to your 401(k) with the amount your employer is willing to match.
Given data:
- Your annual salary is $40,000.
- Your personal contribution to the 401(k) plan is $1,400.
- Your employer matches 100% of your contribution up to 5% of your salary.
Let's calculate the dollar value of 5% of your annual salary:
5% of $40,000 is calculated as: 0.05 * $40,000 = $2,000.
So, your employer is ready to contribute up to $2,000 since that is 5% of your annual salary.
Now, we compare your personal contribution to the maximum your employer will match. You are contributing $1,400, which is less than the maximum amount your employer will match.
Therefore, your employer will match your contribution dollar-for-dollar since it doesn't exceed their maximum. They will contribute $1,400 to your 401(k) plan.
Hence, the correct answer is:
B $1,400
