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Effects of Retirement Contributions on Paycheck in OASDI

A study was conducted to examine the effect of retirement contributions on paycheck in Old Age, Survivors, and Disability Insurance(OASDI). The purpose of this study was to determine whether or not the effect of retirement contributions on paycheck in OASDI is dependent on age, age group, or gender.

An employer-sponsored retirement contributions on paycheck savings account can be one of your best tools to ensure a peaceful retirement. It provides two (2) important advantages. First, the payment of taxes on all your contributions and income is deferred. You only pay taxes on your contributions and your income only when you withdraw money. The second advantage is that most employers make matching contributions to your account, which can range from 0% to 100% of your contributions. Use this calculator to see the impact of increasing your 401(k), 403(b), or 457 plan contributions on your paycheck and retirement. This calculator has been updated to use the new withholding tax tables.

Effects of Your Retirement Contributions 

Gross income

This is your income for the payroll period before any deductions.

Pay period

This is how often you get paid. Its alternatives are: Weekly (52 annual payments), Biweekly (26 annual payments), Two (2) Bimonthly (24 annual payments), and Monthly (12 annual payments)

Civil status

This is the marital status for filing your income tax return. The alternatives are “Single” and “Married”. Choose “Married” if you are married or “head of household”. Choose “Single” if you file your return as single or you are married but filing separately.

Number of Exemptions

When your Federal Tax withholding is calculated, you are allowed to claim exemptions to reduce your Federal Tax withholding. The number of exemptions to claim will depend largely on the number of dependents you have and your itemized deductions. This calculator allows you to choose from 0 to 99 exemptions.

State and Local Tax

This is the percentage that will be deducted for state and local taxes. We take your gross income, minus $4,300 for each exemption, and multiply it by this percent to calculate your estimated state and local tax. Important: This calculator can only estimate your state and local withholding.

Deductions before taxes

Please enter any payroll deductions your employer takes before taxes. This could include your health insurance, life insurance among other pre-tax decoctions.

Deductions after taxes

Please enter any payroll deductions your employer takes after taxes.

Refunds after Taxes

Any after-tax refund made by your employer to you.

FICA OASDI

FICA Elderly Survivor and Disability Insurance: FICA OASDI is calculate by multiplying 6.2% by your gross income. It is important to note that this calculator does not take into account the total FICA Old Age, Survivors, and Disability Insurance(OASDI) paid for the current year. For the year 2022, income over $147,000 which has already reached the maximum withholding of $9,114 from FICA OASDI will not be subject to additional withholding from FICA OASDI.

Medicare FICA

FICA Medicare is calculate by multiplying your gross income by 1.45% unlike the FICA OASDI, the FICA Medicare does not have an annual limit for the deduction.

Federal Tax Withholding Calculation

Income Tax withholding is calculate:

  • Multiplying gross taxable wages by the number of annual pay periods to compute your annual wages.
  • This is subtract from the value of the exemptions allow (for the year 2022 it is $4,300 multiply by the number of exemptions withhold claim).
  • Your annual tax is determine using the tables below (single and marry rates respectively).
  • Finally, we divide the total tax amount by the number of annual pay periods, thus arriving at the amount of federal income tax withheld to be deduct each pay period.

Plan Type

Choose from employer-sponsored plan types. The alternatives are 401(k), 403(b) and 457. Your choice does not alter the calculations; it is only use for the presentation of the result.

Plan Retention

This is the percent of your gross income that you contribute to your 401(k), 403(b), or 457 deferred income retirement accounts. Although adding savings to your retirement account reduces your take-home income, it also lowers Federal income tax withholding. The impact on your pay may be less than you think.

Even if your plan does not have a limit on the percentage to defer, this calculator limits the percentage to defer to 80% of your FICA (Social Security and Medicare) tax account. Note: Your contributions to the plan may be limit to less than 80% of your income. Check with the plan administrator for details. For 2022, the maximum contribution to a 401(k), 403(b), or 457 is $20,500 per year for individuals under age 50 and $27,000 for individuals over age 50.

Current age

Your current age

Retirement age

Age at which you want to retire. This calculator assumes that in the year you retire, you made no contribution to the plan. So if you retire at age 65, your last contribution occurred when you were 64.

Annual contribution limit

Your annual contribution for one (1) year is based on your annual income multiplied by your contribution percentage. However, your annual contribution is also subject to a maximum total annual contribution. For 2022, the maximum contribution to a 401(k), 403(b), or 457 is $20,500 per year for individuals under age 50 and $27,000 for individuals over age 50. It is important to bear in mind that the employer contribution is not affect by the maximum annual contribution limit.

It is important to note that some employees are subject to other types of limitations on their contributions. These employees are classified as “highly compensated” and may be subject to limitations on their contributions based on the participation of all employees. If you expect your salary to be $135,000 or more in 2022 or $130,000 or more in 2021, you may need to contact your employer to see if these additional contribution limits apply.

Annual rate of return

It is the compound annual rate of return that you expect to achieve on your savings or investments. The actual rate of return depends largely on the types of investments you choose. For the 10 years ending December 31, 2020, the Standard & Poor’s 500 Index (S&P 500) had a compound annual rate of return of 13.8%, including dividends reinvested. From January 1, 1970 to December 31, 2020, the average S&P 500 CAGR of return, including reinvested dividends, was approximately 10.8% (source: www.spglobal.com). Since 1970, the highest return in a 12-month period was 61% (June 1982 to June 1983). The lowest return in a 12-month period was -43% (March 2008 to March 2009). Savings accounts at a financial institution can pay as little as 0.25%, or even less, but has a much lower risk of principal loss.

It is important to remember that these are hypothetical cases and that future rates of return cannot be predict with certainty, and that investments that pay higher rates of return are generally subject to greater 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 the principal of your investment. It is not possible to invest directly in an index, and the compound rate of return mention above does not reflect sales charges and other expenses and fees that may be charge by investment funds and/or investment companies.

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