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|Individual 401(k) Savings Calculator Inputs
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It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that Separate Account investment funds and/or investment companies may charge.
If you earn less than $184,821 in 2015, your maximum is calculated as follows: First, as the employee, you are able to contribute up to $18,000 in 2015 to your Individual 401(k) or 100% of your self-employment income, whichever is less. For individuals age 50 or over, an additional $6,000 catch-up contribution increases this portion of your contribution to $24,000, but still limited to no more than 100% of your earned income. Second, you are allowed employer contributions - even though self-employed people are in-fact their own employee. Employer contributions, for the self-employed, are limited to an additional 25% of adjusted net business profits, up to the maximum total amount allowed per year.
As an example, consider a 25-year-old self-employed person with an net income of $40,000 per year. They would be able to contribute:
It is important to note that you may be subject to additional contribution limitations if you participate in an additional retirement program through another employer. For 2015, total retirement plan contributions are limited to $53,000 or 100% of your total compensation for the year ($59,000 if age 50 or older). This includes contributions to your Individual 401(k) as well as any other employer plan. It also includes profit matching and employer contributions. Contributions to a Traditional IRA or Roth IRA are not included in this limit. Catch-up contributions for individuals over 50 are also not included in this limit.
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