- Current age
- Your current age.
- Age at retirement
- Age you wish to retire.
- Current tax rate
- The current marginal income tax rate you expect to pay on your taxable income. **TAXTABLE_CURRENT_DEFINITION**
- Retirement tax rate
- The marginal federal income tax rate you expect to pay on your retirement account distributions. Keep in mind that the calculator does not factor in other taxes such as state taxes, which could affect the comparison.
- Hypothetical rate of return
- The hypothetical annual effective rate of return for your 401(k) account. This calculator assumes that your deposits are made at the beginning of each pay period. For annual pay frequencies, it assumes the contributions are made at the beginning of the year. The actual rate of return is largely dependent on the type of investments you select.
It is important to remember that future rates of return can't be predicted and that investments that have a higher return potential are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time. This includes the potential loss of principal on your investment.
- Current income
- This is your current annual income.
- Annual contribution
The amount you expect to contribute to a 401(k) each year. This calculator assumes that new contributions to your account are made until you reach your retirement age. If you are currently age 29 and expect to retire at age 65, your first new contribution will happen at age 30 and continue until through age 65.
**401k_ANNUAL_LIMITS_LONG** It is also important to note that employer contributions will not count towards the employee's annual contribution limit under Code Section 402(g). Both the annual maximum and 'catch-up' provisions are indexed for inflation. Your plan may also impose limits on how much you can contribute.
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. You may need to contact your employer to see if these additional contribution limits apply to you.
- Current contribution type
- This is either Roth or Traditional. If you choose 'Roth' the calculator will increase the assumed contribution to your 'Traditional' option to equal the same net take home pay. If you choose 'Traditional' the calculator will decrease the assumed contribution to your 'Roth' option to equal the same net take home pay.
- Pay frequency
- How often you are paid. The tool uses this entry to calculate the net impact on your paycheck.
- Qualified Distribution
- There are two requirements to take a qualified distribution from a Roth 401(k) account. A qualified distribution is one that is taken (i) at least five tax years from the year of your first Roth 401(k) contribution; and (ii) on or after the date on which you reach age 59 1/2 (or upon disability or death).
- Hypothetical Value at Retirement Age after Taxes, Traditional 401(k) and After-Tax Amount Invested
- 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-deferred contributions and 2) The accumulated value of the income tax savings of any contributions that exceeded your 401(k) contribution limit, if any, if you invested them as after-tax contributions to a tax-deferred vehicle. For these earnings, distributions are taxed at the same tax rate you indicate in the Retirement tax rate.