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401(k) Spend It or Save It Calculator
There are several ways to manage your 401(k) balance when you leave an employer. The most fundamental of which is should you spend it or save it? Depending on your age and tax bracket, making the wrong decision can cost you thousands of dollars both in taxes and lost earnings. This calculator helps illustrate the difference.


Definitions

Current age
Your current age.


Age of retirement
Age you wish to retire. We calculate the ending balance at retirement for each of your rollover options.


Federal income tax rate
Consult the table below to determine your federal tax bracket. If you are unsure, the calculator will choose 25%. Please note that state taxes are entered in a separate entry field.


Filing Status and Income Tax Rates 2005

Caution: Do not use these tax rate schedules to figure 2004 taxes. Use only to figure 2005 estimates.
Tax
Rate
Married filing jointly or Qualified Widow(er) Single Head of Household Married filing seperately
10% $0-14,600 $0 - 7,300 $0 - $10,450 $0 - 7,300
15% $14,601- 59,400 $7,301- 29,700 $10,451- 39,800 $7,301- 29,700
25% $59,401- 119,950 $29,701- 71,950 $39,801- 102,800 $29,701- 59,975
28% $119,951- 182,800 $71,951- 150,150 $102,801- 166,450 $59,976- 91,400
33% $182,801- 326,450 $150,151- 326,450 $166,451- 326,450 $91,401- 163,225
35% over $326,450 over $326,450 over $326,450 over $163,225

Source: Revenue Procedure 2004-71 (http://www.irs.gov/pub/irs-drop/rp-04-71.pdf)

State income tax rate
The current State marginal tax rate you expect to pay on any additional income (or taxable distributions).


Current 401(k) balance
The starting balance or current amount you have invested or saved in your 401(k).


Annual rate of return
The annual rate of return for your 401(k) account. The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2004, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.5% per year. During this period, the highest 12-month return was 64%, and the lowest was -39%. Savings accounts at a bank pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are 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.


Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We can not and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes.
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