Retirement Account Contribution Accelerator
Retirement Account Contribution Accelerator Definitions
- Annual contribution limits
- Your total contribution for one year is based on your annual salary times the percent you contribute. While increasing your retirement account savings does lower your take home pay, it also lowers your Federal income tax withholding. The impact on your paycheck might be less than you think. While your plan may not have a deferral percentage limit, this calculator limits deferrals to 80% to account for FICA (Social Security and Medicare) taxes. Please note that your 401(k) or 403(b) plan contributions may be limited to less than 80% of your income. Check with your plan administrator for details. For 2017, the maximum contribution to a 401(k) or 403(b) is $18,000 per year for individuals under 50 and $24,000 for individuals 50 or older.
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 $120,000 or more in 2017 or was $120,000 or more in 2016, you may need to contact your employer to see if these additional contribution limits apply to you. Participants in 403(b) and 457(b) plans may also be able to make additional special contributions.
- 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), Bi-week (26 paychecks per year), Semi-monthly (24 paychecks per year), Monthly (12 paychecks per year) and Annually (1 paycheck per year).
- Current account balance
- The current balance of this account.
- Annual rate of return
- The annual rate of return for your 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 types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending Dec. 1st, 2015, had an annual compounded rate of return of 7.76%, including reinvestment of dividends. From January 1970 through to Dec. 2015, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.5% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% 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 Separate Account investment funds and/or investment companies may charge.
- 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 occurs when you are actually 64.
- Expected annual salary increase
- The annual percentage you expect your salary to increase. We assume that your salary will continue to increase at this rate until you retire.
- Current contribution rate
- This is the percent of your gross income you put into a taxable deferred retirement account such as a 401(k), 403(b) or 457. While increasing your retirement account savings does lower your take home pay, it may also lower your Federal income tax withholding.
While your plan may not have a deferral percentage limit, this calculator limits deferrals to 80% to account for FICA (Social Security and Medicare) taxes. Please note that your plan's contributions may be limited to less than 96% of your income. Check with your plan administrator for details. For 2017, the maximum contribution to a 401(k), 403(b) or 457 is $18,000 per year for individuals under 50 and $24,000 for individuals age 50 and over.
- Contribution Accelerator percentage
- This is amount that we will increase your employee contribution percentage each year. The annual increase will continue until you have reached your plan's specified maximum percent, or the annual contribution limit (see below).
- Contribution Accelerator percentage stops
- This is the maximum contribution that your plan allows Contribution Accelerator to increase your contribution rate. If your plan caps Contribution Accelerator at 10%, example, enter this number and your contribution rate will not increase beyond 10% as a result of Contribution Accelerator.
- Employer match
- An employer match is in addition to your annual contributions. It is based on a percentage of your annual contributions. This range can be anywhere from 0% to 100%.
For example, let's assume the employer matches 50% of the employee's contributions up to 6% of their salary. The employee earns $100,000 per year and contributes 10%. The results would be:
- $10,000 from the employee
- $3,000 from the employer (which is 50% of $6,000 or 6% of the annual salary)
- Total: $13,000
Please read the definition for 'Employer maximum' for a detailed description of maximum employer matching contributions. It is also important to note employer contributions do not affect the maximum amount allowed to be contributed by an employee. Matching contributions can be subject to a vesting schedule. See your plan information for details.
- Employer maximum
- This is the maximum percent of your salary matched by your employer regardless of the amount you decide to contribute. For example, let's assume your employer has a 50% match, up to a maximum of 6% of your annual salary. If you have an annual salary of $25,000 and contribute 6%, your annual contribution is $1,500. With a 50% match, your employer will add another $750 to your 401(k) account. If you increase your contribution to 10%, your annual contribution is $2,500 per year. Your employer match, however, is limited to the first 6% of your salary and remains at $750.