You start a new job with an international manufacturing company. One of the perks of the new
Question:
You start a new job with an international manufacturing company. One of the perks of the new role is that the company offers a dollar-for-dollar 401(k) match, up to a maximum of 3,000 per year. You would like to maximize your retirement contributions this year, but you can only afford to save $4,000 after-tax dollars. Under the current tax law, the limit on contributions to individual retirement accounts is $6,200 after-tax into a Roth or $6,200 pre-tax into a deductible IRA. The limit on personal contributions to 401(k) plans is $19,000. You now have 35 years until retirement and a 30% marginal tax rate. You expect your tax rate in retirement will remain at 30%. Your pre-tax rate of return is 11%.
What is the optimal retirement savings strategy this year?
Income Tax Fundamentals 2015
ISBN: 9781305177772
33rd edition
Authors: Gerald E. Whittenburg, Martha Altus-Buller, Steven Gill