Never had a 401K - quick question

When you elect to do let's say 5% into a 401K, does that mean 5% of your total salary (pre-tax) divided by the number of pay periods? Meaning, if your salary is 50K, you'd be contributing $2,500 over the course of the year, then that figure gets divided by 24 (# of pay periods) for deductions. OR, if you do 5%, is it 5% of each pre-taxed payroll amount?

Re: Never had a 401K - quick question

Re: Never had a 401K - quick question

either way it's the same amount, no matter how you split it - basic rules of multiplication

but yes, it is calculated at each paycheck - so if you get a raise mid-year, the percentage comes off the new amount in that pay period

Re: Never had a 401K - quick question

Oops. didn't realize it was the same. I'm not the smartest girl (as if you couldn't tell) when it comes to math.

Re: Never had a 401K - quick question

If you elect to contribute 5%, they will deduct 5% of your weekly salary...at least thats what my company does...every week (well bi-weekly) there is a 5% pre-tax deduction which goes into my 401K.