Wednesday May 16th, 2012

Retirement Contribution Effects on Your Paycheck

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 You only pay taxes on contributions and earnings when the money is withdrawn.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 2009.

Saving an extra PAYCHECK_DIFFERENCE per paycheck could produce DOLLARS_DIFFERENCE at retirement. This was calculated by comparing the results of contributing RETIRE_PLAN_PERCENT1 to your retirement plan vs. RETIRE_PLAN_PERCENT2 to your retirement plan over the next YEARS years. To receive your employer's maximum match of EMPLOYER_DOLLARS, you should contribute at least EMPLOYER_CALC_MAX of your annual salary.

**GRAPH**

&NBSP;	Contribute RETIRE_PLAN_PERCENT1	Contribute RETIRE_PLAN_PERCENT2
Plan type	PLAN_TYPE	PLAN_TYPE
Current balance	STARTING_AMOUNT	STARTING_AMOUNT
Years to invest	YEARS	YEARS
Annual rate of return	RATE_OF_RETURN	RATE_OF_RETURN
Annual salary	ANNUAL_SALARY	ANNUAL_SALARY
Expected annual salary change	SALARY_INCREASE	SALARY_INCREASE
Your contribution*	CONTRIBUTE_ANNUAL per year	CONTRIBUTE_ANNUAL2 per year
Your employer's match	EMPLOYER_ANNUAL per year MSG_EMPLOYER_MATCH_DESC	EMPLOYER_ANNUAL2 per year MSG_EMPLOYER_MATCH_DESC
Total you will contribute	TOTAL_AMOUNT_YOU_HAVE_PAID_IN	TOTAL_AMOUNT_YOU_HAVE_PAID_IN2
Total your employer will contribute	TOTAL_AMOUNT_EMPLOYER_PAID_IN	TOTAL_AMOUNT_EMPLOYER_PAID_IN2
Total at age AGE_OF_RETIREMENT	TOTAL_AT_END_OF_INVESTMENT	TOTAL_AT_END_OF_INVESTMENT2

*The annual maximum for 2010 is $16,500. In 2010, employees 50 or over can deposit an additional $5,500 'catch-up' contribution into their account. It is also important to note that employer contributions do not affect an employee's maximum annual contribution limit. The maximum contributions and 'catch-up' provisions are automatically included in your results. If you have entered an expected salary change, this is the total for the first year only, your annual total will change as your salary increases or decreases.

Paycheck Withholding Summary
&NBSP;	Contribute RETIRE_PLAN_PERCENT1	Contribute RETIRE_PLAN_PERCENT2	Difference
Pay period:	PAY_LABEL	PAY_LABEL	&NBSP;
Filing status:	FILING_STATUS	FILING_STATUS	&NBSP;
Year to date income:	YEAR_TODATE_EARNINGS	YEAR_TODATE_EARNINGS	&NBSP;
Gross pay per period:	GROSS_EARNINGS1	GROSS_EARNINGS2	GROSS_EARNINGS3
Projected annual income:	ANNUAL_INCOME1	ANNUAL_INCOME2	ANNUAL_INCOME3
Number of allowances:	WITHHOLD_COUNT1	WITHHOLD_COUNT2	WITHHOLD_COUNT3
DD_CATAGORY1	DD_CURRENT1	DD_PROPOSED1	DD_DIFFERENCE1
DD_CATAGORY2	DD_CURRENT2	DD_PROPOSED2	DD_DIFFERENCE2
DD_CATAGORY3	DD_CURRENT3	DD_PROPOSED3	DD_DIFFERENCE3
DD_CATAGORY4	DD_CURRENT4	DD_PROPOSED4	DD_DIFFERENCE4
DD_CATAGORY5	DD_CURRENT5	DD_PROPOSED5	DD_DIFFERENCE5
DD_CATAGORY6	DD_CURRENT6	DD_PROPOSED6	DD_DIFFERENCE6
DD_CATAGORY7	DD_CURRENT7	DD_PROPOSED7	DD_DIFFERENCE7
DD_CATAGORY9	DD_CURRENT9 (RETIRE_PLAN_PERCENT1 of income, this may be limited by 2010 annual limits)	DD_PROPOSED9 (RETIRE_PLAN_PERCENT2 of income, this may be limited by 2010 annual limits )	DD_DIFFERENCE9
Total deductions	TOTAL_DEDUCTIONS1	TOTAL_DEDUCTIONS2	TOTAL_DEDUCTIONS3
DD_CATAGORY8	DD_CURRENT8	DD_PROPOSED8	DD_DIFFERENCE8

Account Balance by Year

**REPEATING GROUP**

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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 2009, 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 2009, 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:

1. Multiplying taxable gross wages by the number of pay periods per year to compute your annual wage.
2. Subtracting the value of allowances allowed (for 2009, this is $3,650 multiplied by withholding allowances claimed).
3. Determining your annual tax by using the tables below (single and married rates, respectively).
4. 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*

Annual taxable income between these amounts		Annual withholding	Withhold additional % of income over this amount
$0.00	$2,650.00	$0.00
$2,650.00	$10,400.00	$0.00	10%	$2,650.00
$10,400.00	$35,400.00	$775.00	15%	$10,400.00
$35,400.00	$84,300.00	$4,525.00	25%	$35,400
$84,300.00	$173,600.00	$16,750.00	28%	$84,300.00
$173,600.00	$375,000.00	$41,754.00	33%	$173,600.00
$375,000.00	(no limit)	$108,216.00	35%	$375,000.00
*This information is from IRS Publication 15, Rev. January 2009, for wages paid in 2009.

Married Withholding Rates*

Annual taxable income between these amounts		Annual withholding	Withhold additional % of income over this amount
$ 0.00	$ 8,000.00	$0.00
$ 8,000.00	$ 23,950.00	$0.00	10%	$ 8,000.00
$ 23,950.00	$75,650.00	$1,595.00	15%	$ 23,950.00
$75,650.00	$144,800.00	$9,350.00	25%	$75,650.00
$144,800.00	$216,600.00	$26,637.50	28%	$144,800.00
$216,600.00	$380,700.00	$46,741.50	33%	$216,600.00
$380,700.00	(no limit)	$100,894.50	35%	$380,700.00
*This information is from IRS Publication 15, Rev. January 2009, for wages paid in 2009.

Plan type
Choose the type of plan your employer sponsors. The choices are 401(k), 403(b) or 457. Your plan choice will not affect the calculations, it is only used to label the generated results.

Plan withholding
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 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% 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 2009, the maximum contribution to a 401(k), 403(b) or 457 is $16,500 per year for individuals under 50 and $22,000 for individuals age 50 and over.

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 contribution limits
Your total contribution for one year is based on your annual salary times the percent you contribute. However, your annual contribution is also subject to certain maximum total contributions per year. The annual maximum for 2009 is $16,500. If you are age 50 or over, a "catch-up" provision allows you to contribute additional $5,500 into your account. It is also important to note that employer contributions do not affect an employee's maximum annual contribution limit. The catch-up amount is indexed for inflation in increments of $500.

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 2009 or was $105,000 or more in 2008, 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.