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# How to Figure Out Percentages of 401(k) From a Paycheck

Original post by Natalie Grace of Demand Media

401(k) contributions can be made before or after taxes are withheld.

A traditional 401(k) plan meets the criteria of the Internal Revenue Code, which allows an employee to make contributions in pretax dollars. Roth 401(k) plan contributions are made in after-tax dollars. Many employers agree to match employees’ contributions up to a certain amount. For 2011, an employee can contribute up to \$16,500 into a traditional 401(k) or Roth plan; employees over age 50 can contribute an additional \$5,500. When an employee enrolls into a 401(k) plan, she chooses the percentage that she wants deducted from her paychecks. Therefore, the deduction amount depends on the employee’s election.

## Contents

### Step 1

Obtain the percentage that the employee elected to contribute from the 401(k) agreement that the employee signed.

### Step 2

Determine the employee’s gross pay – total income for the pay period before deductions.

### Step 3

Deduct 401(k) contributions from gross pay before withholding federal and applicable state and local income tax, if the employee has a traditional 401(k) plan. This process lowers her taxable wages. To arrive at the contribution amount, multiply the elected percentage by the employee’s gross pay. Assuming that she elects to make a 5-percent contribution and earns \$400 weekly, her contribution is \$20. If the employer agreed to match up to 5 percent, then the total contributions towards her account are \$40.

### Step 4

Subtract Roth 401(k) contributions from the employee’s pay based on the elected percentage after withholding income taxes. This process does not reduce the employee’s taxable wages.

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### Tips & Warnings

• Consult your state revenue agency to find out if state and local income tax should be withheld from traditional 401(k) contributions; this practice varies by state.