How much in taxes do I save by saving in a 401(k) plan vs. saving outside the plan?
Basic Assumptions
ContributionEarnings rate (%)Years in planAnnual Household Income at ContributionAnnual Household Income at DistributionFiling StatusSingleMarried Filing JointlyMarried Filing SeparatelyHead of HouseholdTax earnings yearly?YesNoCalculate
October Three does not provide legal or tax advice, and the information provided above is general in nature and should not be considered legal or tax advice. Consult with an attorney or tax professional regarding your specific legal or tax situation.
Pretax contributions are subject to the annual IRS dollar limit.
Based on tax laws applicable for 2018
Currently using LTCG tax rate even when out of plan earnings are taxed each year
Assuming the contribution is all coming from the same tax bracket
Distribution is assumed to occur as a lump sum as opposed to drawing down an account while still enjoying tax deferred growth within the plan