ALASKA Part 60

For example:

You earn $40,000 gross wages/year.

6% of your wages goes into a mandatory retirement account ($40,000 x .06 = $2,400).

3% of your wages goes into a voluntary retirement account (deferred compensation, 401(k), TSP). ($40,000 x. .03 = $1,200).

Your total retirement contributions are 9% of gross wages. However, the total allowed deduction for both mandatory and voluntary retirement contributions is 7.5 % of gross wages. Because you have a mandatory 6% contribution, you can only deduct 1.5% of the voluntary contribution ($40,000 x .015 = $600). Both the mandatory contribution of $2,400 + the voluntary contribution of $600 = $3000.