My brain is spinning, and I could use some clarification. In WCI's blog scenario today (What to Do If All You Have Is a 401(k)), he includes the $5k employer match as part of the gross salary when calculating what the target savings should be at 20%.
My question: If I receive a 401K profit-sharing contribution (in liue of an employer "match"), should I factor that into my gross salary when trying to determine what the 20% savings target is?
And, then do I re-use that profit-sharing number when trying to determine if I am meeting that savings goal?
Below are the real-time numbers from last year. Could someone weigh-in as to whether I am looking at this correctly?
Base Salary $200k
Board Member Stipend $5K
Profit Sharing 401K Contribution $39,750
Bonus $85k
Total $329,750 (so 20% savings target = $65,950)
________________
Savings Comprised of:
$53000 to 401(k) which is = to the $39,750 profit sharing + $13,250 contributed out of paycheck pre-tax
$11,000 Backdoor Roth Contributions (me and non-working spouse)
$1950 Contribution to taxable account
Total Retirement Savings $65,950
Or....should it have looked like this:
Base Salary $200k
Board Member Stipend $5K
Bonus $85k
Total $290,000 (20% savings target = $58,000)
Savings Comprised of:
$53000 to 401(k) which is = to the $39,750 profit sharing + $13,250 contributed out of paycheck pre-tax
$11,000 Backdoor Roth Contributions
Total Retirement Savings $64,000 (over the 20% goal...but okay because we are maxing out what we can save.)
Basically, I am just confused about how to treat the profit-sharing contribution. I should add that we are comfortable with the amount we are putting away for kids' college savings...but would like to be paying down our house faster.
TIA for your input.
My question: If I receive a 401K profit-sharing contribution (in liue of an employer "match"), should I factor that into my gross salary when trying to determine what the 20% savings target is?
And, then do I re-use that profit-sharing number when trying to determine if I am meeting that savings goal?
Below are the real-time numbers from last year. Could someone weigh-in as to whether I am looking at this correctly?
Base Salary $200k
Board Member Stipend $5K
Profit Sharing 401K Contribution $39,750
Bonus $85k
Total $329,750 (so 20% savings target = $65,950)
________________
Savings Comprised of:
$53000 to 401(k) which is = to the $39,750 profit sharing + $13,250 contributed out of paycheck pre-tax
$11,000 Backdoor Roth Contributions (me and non-working spouse)
$1950 Contribution to taxable account
Total Retirement Savings $65,950
Or....should it have looked like this:
Base Salary $200k
Board Member Stipend $5K
Bonus $85k
Total $290,000 (20% savings target = $58,000)
Savings Comprised of:
$53000 to 401(k) which is = to the $39,750 profit sharing + $13,250 contributed out of paycheck pre-tax
$11,000 Backdoor Roth Contributions
Total Retirement Savings $64,000 (over the 20% goal...but okay because we are maxing out what we can save.)
Basically, I am just confused about how to treat the profit-sharing contribution. I should add that we are comfortable with the amount we are putting away for kids' college savings...but would like to be paying down our house faster.
TIA for your input.
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