1. Before TAX or After TAX? the 401(k) Question B enefits T raining
A dvantage

5. AGENDA  Pre-Tax Vs. After-Tax Investing
 Turning $100 into $174 by investing before TAX
 How to give 65% of all of your savings to the I R S
instead of your family

8. IRS
IRC 404C
401paragraph(K)

12. The Story of Jack & Jill

13. Jack No 401(k) Net Take Home Pay $1286 NET NET Spendable Income $1186
Monthly Wages $2000
FICA (Social Security) $ 154
Fed/State 28% $ 560
Net Take Home Pay $1286
Monthly Savings/Investments $ 100
NET NET Spendable Income $1186
Total Monthly Savings/Investments $ 100

14. * Jill * With a 401(k) Net Taxable Pay $1900
Monthly Wages $2000
Savings/Investments $ 100
Net Taxable Pay $1900
FICA (Social Security) $ 154
$ 521
*Income Taxes on $1900 not $2000
NET NET Spendable Income $1186
Savings/Investments (difference of savings $39
($560 -$521= $39) $25
Company Match 25% of contribution $74
Total Monthly Investment of $ 174

15. Is it worth it? Jack Jill Net Take Home Pay $1286
Monthly Wages $2000
Monthly Wages $2000
FICA (Social Security) $ 154
Savings/Investments $ 139
Federal & State TAX $ 560
Net Taxable Pay $1861
Net Take Home Pay $1286
FICA (Social Security) $ 154
Federal & State Income TAX $ 521
*Income Taxes on $1900 not $2000
Monthly Investments $ 100
NET NET Spendable Income $1186
NET NET Spendable Income $1186
Savings/Investments $ 139
Company 25% $ 25
Total Monthly Investment of $ 174
Total Monthly Investments $ 100

16. Jack No 401(k) Jill With a 401(k)
5 YEARS
10 YEARS
20 YEARS
35 YEARS
$8,001
$20,034
$49,922
$145,931
$14,022
$36,605
$131,549
$417,888
Results of investing
after-taxes in a taxed
environment
Results of investing
before-taxes in a tax-defered
environment
INCOME 10% MINUS 28% TAXES
$11, $30,087

17. $417,888 - $145,931 = $271,957 Your true TAX bite:
AKA “what our Uncle Sam forgets to tell us”
$100 invested every month for 35 years, 28%
annually on the growth: (Jack ) $145,931
$100 invested every month for 35 years, Pre-tax & tax-defered
annually on the growth: (Jill) $417,888
$417,888 - $145,931 = $271,957

18. What
is the
$ COST $ of
Waiting?

21. WHATS THE NEXT STEP?
401(K) BUCKET