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An employer sponsored retirement savings account could be one of your best tools for creating a secure retirement. It provides two important advantages. First, all contributions and earnings are tax deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to your account, which can range from 0% to 100% of your contributions. Use this calculator to see how increasing your contributions to a 401(k), 403(b) or 457 plan can affect your paycheck as well as your retirement savings. This calculator has been updated to use the new withholding schedules for 2010.
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Definitions
- Gross pay
- This is your gross pay, before any deductions, for the pay period.
Please enter a dollar amount from $1 to $1,000,000.
- Pay period
- This is how often you are paid. Your selections are: Weekly (52 paychecks per year), Every other week (26 paychecks per year), Twice a month (24 paychecks per year), and Monthly (12 paychecks per year).
- Filing status
- This is your income tax filing status. The choices are "Single" and "Married".
Choose "Married" if you are married or file as "head of household". Choose "Single" if you file your taxes as a single person or if you are married but file separately.
- Number of allowances
- When your Federal income tax withholdings are calculated, you are allowed to claim allowances to reduce the amount of the Federal income tax withholding. In 2010, each allowance you claim is equal to $3,650 of income that you expect to have in deductions when you file your annual tax return. The number of allowances you should claim depends largely on the number of dependents you have and your itemized deductions. This calculator allows from 0 to 99 allowances.
- State and Local Taxes
- This is the percentage that will be deducted for state and local taxes. We take your gross pay, minus $3,650 per allowance, times this percentage to calculate your estimated state and local taxes. Please note, this calculator can only estimate your state and local withholdings.
- Pre-tax deductions
- Enter any payroll deductions made by your employer that are made with pre-tax income. This might include your health insurance, life insurance among other pre-tax deductions.
- Post-tax deductions
- Enter any payroll deductions made by your employer that are made with after tax income.
- Post-tax reimbursements
- Enter any reimbursements made by your employer that are after tax.
- Year to date income
- Income from your employer that you have been paid during the current year, before the current payroll period. We use this amount to determine if you are still required to pay FICA OASDI for the current payroll period.
- FICA OASDI
- FICA Old Age Survivors and Disability Insurance. FICA OASDI is calculated as your gross earnings times 6.2%. Please note that this calculator does not make any assumptions as to the total FICA OASDI paid for the current year. For 2010, incomes over $106,800 that have already had the maximum FICA OASDI amount of $6621.60 withheld will not have additional FICA OASDI withholdings.
- FICA Medicare
- FICA Medicare is calculated as the gross earnings times 1.45%. Unlike FICA OASDI there is no annual limit to FICA Medicare deductions.
- Federal tax withholding calculations
- Federal income tax withholdings were calculated by:
- Multiplying taxable gross wages by the number of pay periods per year to compute your annual wage.
- Subtracting the value of allowances allowed (for 2010, this is $3,650 multiplied by withholding allowances claimed).
- Determining your annual tax by using the tables below (single and married rates, respectively).
- Dividing the amount of tax by the number of pay periods per year to arrive at the amount of federal withholding tax to be deducted per pay period.
Single Withholding Rates*
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Annual taxable income between these amounts |
Annual withholding |
Withhold additional % of income over this amount |
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$0.00 |
$6,050.00 |
$0.00 |
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$6,050.00 |
$10,425.00 |
$0.000 |
plus 10% of income over $6,050.00 |
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$10,425.00 |
$36,050.00 |
$437.50 |
plus 15% of income over $10,425.00 |
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$36,050.00 |
$67,700.00 |
$4,281.25 |
plus 25% of income over $36,050.00 |
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$67,700.00 |
$84,450.00 |
$12,193.75 |
plus 27% of income over $67,700.00 |
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$84,450.00 |
$87,700.00 |
$16,716.25 |
plus 30% of income over $84,450.00 |
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$87,700.00 |
$173,900.00 |
$17,691.25 |
plus 28% of income over $87,700.00 |
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$173,900.00 |
$375,700.00 |
$41,827.25 |
plus 33% of income over $173,900.00 |
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$375,700.00 |
(no limit) |
$108,421.25 |
plus 35% of income over $375,700.00 |
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Married Withholding Rates*
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Annual taxable income between these amounts |
Annual withholding |
Withhold additional % of income over this amount |
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$0.00 |
$13,750.00 |
$0.00 |
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$13,750.00 |
$24,500.00 |
$0.00 |
plus 10% of income over $13,750.00 |
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$24,500.00 |
$75,750.00 |
$1,075.00 |
plus 15% of income over $24,500.00 |
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$75,750.00 |
$94,050.00 |
$8,762.50 |
plus 25% of income over $75,750.00 |
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$94,050.00 |
$124,050.00 |
$13,337.50 |
plus 27% of income over $94,050.00 |
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$124,050.00 |
$145,050.00 |
$21,437.50 |
plus 25% of income over $124,050.00 |
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$145,050.00 |
$217,000.00 |
$26,687.50 |
plus 28% of income over $145,050.00 |
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$217,000.00 |
$381,400.00 |
$46,883.50 |
plus 33% of income over $217,000.00 |
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$381,400.00 |
(no limit) |
101,085.50 |
plus 35% of income over $381,400.00 |
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- Plan type
- Choose the type of plan your employer sponsors. The choices are 401(k), 403(b) or governmental 457(b). Your plan choice will not affect the calculations, it is only used to label the generated results.
- Salary deferral
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This is the percent of your gross income you put into a tax deferred retirement account such as a 401(k), 403(b) or governmental 457(b) plan. While increasing your retirement account savings does lower your take home pay, it also lowers your Federal income tax withholdings. The impact on your paycheck might be less than you think. We compare the amount you enter here to the minimal participation rate of 1%.
While your plan may not have a deferral percentage limit, this calculator limits deferrals to 80% of your compensation to account for FICA (Social Security and Medicare) taxes. Please note that your plan's contributions may be limited to less than 80% of your income. Check with your plan administrator for details. For 2010, the maximum contribution to a 401(k), 403(b) or 457 remains unchangee at $16,500 per year for individuals under 50. For individuals over age 50, the limit is $22,000 for 403(b), 401(k), and governmental 457(b) plans. Certain participants in 403(b) plans may be eligible to increase their elective deferral limit by up to $3,000 per year.
- Current age
- Your current age.
- Age of retirement
- Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions. So if you retire at age 65, your last contribution happened when you were actually 64.
- Annual elective deferrals
- The amount you will contribute to a 403(b), 401(k), or governmental 457(b) plan each year on a pre-tax basis. This calculator assumes that you make 12 equal contributions throughout the year at the beginning of each month. The annual maximum for 2010 is $16,500. If you are over 50, a "catch-up" provision allows you to contribute even more to your 401(k), 403(b), or governmental 457(b) plan. In 2007, employees age 50 or over can deposit up to an additional $5,500 into their 401(k), 403(b), or governmental 475(b) account. It is also important to note that employer contributions do not affect an employee's maximum elective deferral limit; however, employer contributions, in rare instances, can affect an employee's overall limit. Certain participants in 403(b) plans may be eligible to increase their elective deferral limit by up to $3,000. Both the annual maximum and "catch-up" provisions are indexed for inflation after 2010.
It is important to note that some employees are subject to another form of contribution limits. Employees in 401(k) plans classified as "Highly Compensated" may be subject to contribution limits based on their employer's overall 401(k) participation. If your salary for the previous plan year was above $100,000, you may need to contact your employer to see if these additional contribution limits apply to you.
It is important to note that some employees are subject to another form of contribution limitations. Employees classified as "Highly Compensated" may be subject to contribution limits based on their employer's overall participation. If you expect your salary to be $110,000 or more in 2010 or was $110,000 or more in 2009, you may need to contact your employer to see if these additional contribution limits apply to you.
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