Min/Max 401k Comparison

Maximum Versus Minimum 401k Contribution Comparison

This online calculator is meant to compare different allocations for a 401k and Roth IRA.

This page will show you what could happen if you currently contribute some amount to a 401k and you want to reduce your contributions to the 401k and increase contributions to a Roth IRA by that amount.

Instructions

  • Enter information into the green-shaded section below (item 1, 2, 3, and 4)
  • Click the Compare button
  • You may view the intermediate results (no shading) or you may ignore them
  • The end results are in the yellow-shaded section (items 18 and 19)

General Info
1 Annual Salary $
2 Years until retirement:

Max 401k Info Min 401k Info
3 Contribution
(percent of salary)
% Contribution
(for full company match)
%
4 Interest Rate for 401k: % Interest Rate for IRA: %
 

5 Annual 401k contribution: $ Annual 401k contribution: $
6 Annual IRA contribution: $ Annual IRA contribution: $
7 Pre-Tax Salary: $ Pre-Tax Salary: $
8 Tax Bracket: $ Tax Bracket: $
9 Current Taxes: $ Current Taxes: $
10 Added: $ Added: $
11 Compounded: $ Compounded: $
12 Take-Home Pay: $ Take-Home Pay: $
13 Take-Home Pay Diff: $ Take-Home Pay Diff: $
14 Compounded: $ Compounded: $
15 Retirement Pre-Tax: $ Retirement Pre-Tax: $
16 Retirement Taxes: $ Retirement Taxes: $
17 Retirement Total: $ Retirement Total: $
18 Retirement with Take-Home Pay Diff: $ Retirement with Take-Home Pay Diff: $
19 Total Taxes Paid: $ Total Taxes Paid: $


Explanations for Each Step

  1. How much money one earns a year

    In this example, this figure is used for determining how much is contributed to a 401k fund per year.

  2. How many years one will be contributing to the 401k

    In this example, this figure is used for determining how many annual contributions will occur and how much compounding will take place.

  3. What percent of one’s salary one deducts before taxes for a 401k

    In this example, this figure is used for determining how much is contributed to a 401k fund per year.

    The first category is what one currently contributes or would like to contribute, in percent of salary. This is an interactive example so you could try various situations.
    The second category is the minimum amount, in percent, of what one needs to contribute in order to get the full company matching amount.

  4. How well one’s fund performs

    In this example, this figure is used for determining how much compounding will take place.
    The 401k rate is under the Max column and the IRA rate is under the Min column.
    Any calculations, whether for the Min column or the Max column, will use the 401k rate for the 401k and the IRA rate for the IRA.

  5. What annual dollar amount one contributes to a 401k

    In this example, this figure is used for determining how much is added to the 401k fund each year.

    This is calculated by taking a percentage (item 3) of the annual salary (item 1).

  6. What annual dollar amount one contributes to a Roth IRA

    In this example, this figure is used for determining how much is added to the IRA fund each year.

    This is calculated by taking a percentage (item 3, max minus min) of the annual salary (item 1).

  7. One’s pay after 401k but before taxes

    In this example, this figure is used for determining how much income is to be taxed.

    This is calculated by subtracting the 401k contributions (item 5) from the annual salary (item 1).

  8. How much one is taxed (percent)

    In this example, this figure is used for determining how much income is to be taxed.

    This is calculated by comparing pre-trax salary (item 7) to the federal tax tables.

  9. How much one is taxed (dollars)

    In this example, this figure is used for determining how much tax to subtract from one’s pay.

    This is calculated by taking a percentage (item 8) of the pre-trax salary (item 7).

  10. How one’s taxes add

    In this example, this figure is used for determining how much tax one has paid over the years.

    This is calculated by multiplying the annual tax amount (item 9) by the number of years (item 2).

  11. How one’s taxes compound

    In this example, this figure is simply for fun.

    This is calculated by compounding the annual tax amount (item 9) over the number of years (item 2).

  12. What one takes home after 401k contributions and taxes

    In this example, this figure is used for determining the difference used in the next step.

    This is calculated by the annual tax amount (item 9) and 401k contributions (item 5) from the annual salary (item 1).

  13. How much more one takes home

    In this example, this figure is used for determining how much more one could contribute to a Roth IRA in the Max case.

    This is how much more one takes home (in the max 401k case as opposed to the min 401k case) because of the increased pre-tax salary deductions.

    This is calculated by the two values of take-home pay (item 12, max case – min case). The value with more pre-tax deductions (max 401k) will be larger since the taxes will be lower.

  14. How much more one takes home, compounded

    In this example, this figure is used for determining how much more one could have in a Roth IRA in the Max case.

    This is calculated by compounding the annual take-home-pay difference (item 13) over the number of years (item 2).

  15. How much one has at the moment he retires

    In this example, this figure is used to show how much one would have at retirement, before taxes.

    This is calculated by compounding the annual 410k contributions (item 5) and IRA contributions (item 6) over the number of years until retirement (item 2).

  16. How much one pays in taxes on that retirement amount

    In this example, this figure is used to adjust the retirement amount to reflect reality.

    This is calculated by taking a percentage (item 3) of the retirement amount (item 15).

  17. How much one has at retirement

    In this example, this figure is used to show how much one would have at retirement, after taxes but without the take-home pay difference.

    This is calculated by subtracting the retirement taxes (item 16) from the retirement pre-tax total after compounding (item 15).

  18. How much one really has at retirement

    In this example, this figure is used to show the net effect (end result) of various 401k and IRA allotments.

    This is calculated by adding the retirement total (item 17) to the extra IRA contributions from the extra take-home pay (item 14).

  19. How much one has paid in taxes

    In this example, this figure is used to show what the government will have received at the time of retirement.

    This is calculated by adding the total annual taxes paid (item 10) to the retirement taxes paid (item 16).

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