Scenario: You are $23-$years$-$old and working in the marketing department of a medium$-$sized corporation. You are earning an annual salary of $$45,000$ paid every two weeks. Your employer provides a $401(k)$ plan, and matches employee contributions by $50\%$ up to a maximum of $?$n$.$ of your annual salary. You are in a $25\%$ marginal tax rate.

Read each of the statements below and indicate whether it reflects an advantage associated with investing in a tax$-$sheltered retirement account.

The greater your marginal tax rate, the greater the tax savings associated with contributions to a taxsheltered retirement account.

It is best that your contributions start later rather than sooner.

Retirement accounts provide their greatest advantage when you start saving earlier$-$rather than later$-$in your lifetime.

The maximum dollar amount your employer will contribute to your $401($k$)$ account this year is $$1,350,$

Assume that you contribute $7\%$ of your gross income to your $401(k)$ account. How much will you contribute annually and per pay$-$period to your retirement account?

$$525$ and $$158,$ respectively

$$3,150$ and $$121,$ respectively

$$3,150$ and $$525,$ respectively

$$135,000$ and $$131,$ respectively