Question

Case Study - Savings

• You are a newly hired analyst at a top company
• Your starting salary is $80,000 year
• You are attempting to save about 10% of your income
• You have the following options for savings and investment.

1. A Company 401K Plan that matches the first 6% Pretax Contributions at a 50% Match rate
2. Your own Individual Retirement Account (IRA) with a balance of $5,500.
3. Your own Roth IRA with a balance of $1,250.
4. Your brokerage account with a balance of $2,500

Based on information in the course, how much would you save each year and in which savings options would you put the money?

Answer 1

ANS WER 8o,oo0/years Savings taugerį 10% ie. F 8000/yoay Tnvestment in 401k Plan The conhibuion made by the analyst in addihon to conmbuion .-bd the employer a-nok bowming a paxt o taxable intome Thuus no tex is paid on those con tibutions Tt is Tecommended to tate bul benetit o the Seheme which tha employer-offers (ie-67.-Makhna 50%) in osder to increase money in tha plan. Amount o con tobution tho should be made fs (480000X6 %)44800 uow'ch wwid be matcheal by the emptoser to the eak n H. ob-キ2400 (s01) oid be maleheal by employe Truus tote con 1i buhon results in 7200 u uh will not be tared TRA Account Conro butions in tsadihona! IRA AoUl asue tax deductible. But these is limit-of 46000 (Age 490γ less) 'andor S a 100O (Age 5o or more). Assumina e 49 or less Balanca amount o 32o shoulo be inueated ha

not tax dedluucHble. Hence Should be t is a normal acoun oith the booter consisting of-me cup R payment,-uoith no ad diioa beneftts.