-
- Current age
- Your current age.
- Annual contribution
- The amount you will contribute to a 401(k) each year. This calculator
assumes that you make 12 equal contributions throughout the year at the
beginning of each month. The annual maximum for 2009 is $16,500. If you are
age 50 or over, a "catch-up" provision allows you to contribute even more to
your 401(k). In 2009, employees age 50 or over can deposit an additional
$5,500 into their 401(k) account. It is also important to note that employer
contributions do not affect an employee's maximum annual contribution limit.
Both the annual maximum and "catch-up" provisions are indexed for inflation.
It is important to note that some employees are subject to another form
of contribution limits. Employees classified as "Highly Compensated" may be
subject to contribution limits based on their employer's overall 401(k)
participation. If you expect your salary to be $110,000 or more in 2009 or
was $105,000 or more in 2008, you may need to contact your employer to see
if these additional contribution limits apply to you.
- Expected rate of return
- The annual rate of return for your 401(k) account. This calculator
assumes that your return is compounded annually and your deposits are made
monthly. The actual rate of return is largely dependent on the type of
investments you select. From January 1970 to December 2008, the average
annual compounded rate of return for the S&P 500, including reinvestment of
dividends, was approximately 9.7% (source: www.standardandpoors.com). During
this period, the highest 12-month return was 61%, from June 1982 through
June 1983. The lowest 12-month return was -39%, which happened twice, once
from September 1973 to September 1974 and again from November 2007 to
November 2008. Savings accounts at a bank may pay as little as 1% or less
but carry significantly lower risk of loss of principal balances.
It is
important to remember that these scenarios are hypothetical and that future
rates of return can't be predicted with certainty and that investments that
pay higher rates of return are generally subject to higher risk and
volatility. The actual rate of return on investments can vary widely over
time, especially for long-term investments. This includes the potential loss
of principal on your investment. It is not possible to invest directly in an
index and the compounded rate of return noted above does not reflect sales
charges and other fees that funds and/or investment companies may charge.
- Age of retirement
- Age you wish to retire. This calculator assumes that the year you
retire, you do not make any contributions to your 401(k). So if you retire
at age 65, your last contribution happened when you were actually 64.
- Current tax rate
- The current marginal income tax rate you expect to pay on your taxable
investments. Use the table below to assist you in determining your current
tax rate.
| 10% |
$0 - 16,700 |
$0 - 8,350 |
$0 - $11,950 |
$0 - 8,350 |
| 15% |
$16,701- 67,900 |
$8,351- 33,950 |
$11,951- 45,500 |
$8,351- 33,950 |
| 25% |
$67,901- 137,050 |
$33,951- 82,250 |
$45,501- 117,450 |
$33,951- 68,525 |
| 28% |
$137,051- 208,850 |
$82,251- 171,550 |
$117,451- 190,200 |
$68,526- 104,425 |
| 33% |
$208,851- 372,950 |
$171,551- 372,950 |
$190,200- 372,950 |
$104,425- 186,475 |
| 35% |
over $372,950 |
over $372,950 |
over $372,950 |
over $186,475 |
Source: http://www.irs.gov/pub/irs-drop/rp-08-66.pdf
- Retirement tax rate
- The marginal tax rate you expect to pay on your investments at
retirement.
- After tax total at retirement
- For the Roth 401(k), this is the total value of the account. For the
Traditional 401(k), this is the sum of two parts: 1) The value of the
account after you pay income taxes on all earnings and tax-deductible
contributions and 2) what you would have earned if you had invested (in an
ordinary taxable account) any income tax savings.
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