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.
The annual maximum for 2014 is $17,500 (the 402(g) limit). If you are age 50 or over, a 'catch-up' provision allows you to contribute even more to your 401(k). Employees over 50 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 after 2006. Your plan may also impose limits on how much you can contribute.
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. 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' we will increase the assumed contribution to your 'Traditional' option to equal the same net take home pay. If you choose 'Traditional' we will decrease the assumed contribution to your 'Roth' option to equal the same net take home pay. Pay frequency
How often you are paid. We use 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. At least 5 years must elapse from the initial contributions, and you must reach age 59 1/2, 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.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.