Funding 401(k)s and Roth IRAs.

Complete the investment chart based on the facts given for each situation. Assume each person is following Dave's advice of investing 15% of the annual household income. Remember to follow this sequence of contributions recommended in the lesson.

Objective

The purpose of this activity is to learn to calculate 15% of an income to save for

retirement and to understand how to fund retirement investments.

Directions:

Complete the investment chart based on the facts given for each situation. Assume each person is following Dave's advice of investing 15% of their annual household income. Remember to follow the sequence of contributions recommended in the lesson.

INVESTMENT /Annual Salary / Company Match / 401(k) / Roth IRA / Total annual Investment

Joe / $40,000 / 1:1 up to 5% / ? ? ?

Melissa / $55,000 / 1:2 up to 6% ? ? ?

Tyler & Megan / $105,000 / No Match ? ? ?

Adrian / $111,000 / 1:1 up to 3% ? ? ?

David&Britney /$150,000 /NoMatch ? ? ?

Brandon / $35,000 /2:1 up to 6% ? ? ?

Chelsea / $ 28, 000 / No Match ? ? ?

1) Joe will take advantage of the company match(5%of salary) then put the rest in a Roth IRA.

2) Melissa will fund the 401(k)up to the match and put the remainder in her Roth.

3) Tyler&Megan can each fund a Roth, then put the remainder in the 401(k). With no match, fund the Roth first(based on 2011contribution of $5,000 per individual).

4) Adrian is not eligible to open a Roth IRA because he makes too much money. He will put his entire15%into his 401(k).

5) David and Britney are still within the guidelines for a married couple(based on 2011contribution of $5,000 per individual). After maxing out the IRA, they will fund the 401(k).

6) Brandon will fund his 401(k)up to the match, then put the remainder in his Roth.

7) Chelsea will fund her Roth IRA.