Investment chart based on annual income and company match contributions.
Investment chart showing annual salary, company match, 401(k), Roth IRA, and total annual investment for individuals and couples, with 15% of annual household income invested.
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Show Answer Key & Explanations
Step-by-step solution for: Traditional IRA vs Roth IRA Worksheet - Janguard
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Show Answer Key & Explanations
Step-by-step solution for: Traditional IRA vs Roth IRA Worksheet - Janguard
To solve this problem, we need to calculate how much money each person or couple invests based on the rules provided.
The Rules:
1. Total Investment Goal: Everyone invests 15% of their Annual Salary.
2. Order of Contributions: We follow a standard financial order:
* Step 1: Contribute enough to the 401(k) to get the full Company Match. (Free money!)
* Step 2: If there is still money left from the 15% goal, put it into a Roth IRA.
* Step 3: If the Roth IRA is maxed out (or if we are just filling the gap), any remaining amount goes back into the 401(k).
* *Note for this chart:* Since no Roth IRA limits are given, we will simply put any leftover money after the match into the Roth IRA column to reach the 15% total.
Calculations Breakdown:
1. Noa
* Salary: $40,000
* Target (15%): $40,000 × 0.15 = $6,000
* Match: 1:1 up to 5%.
* Noa contributes 5% ($2,000). Company matches 5% ($2,000).
* 401(k) Total: $2,000 (Noa) + $2,000 (Company) = $4,000
* Remaining: $6,000 (Target) - $4,000 (401k) = $2,000
* Roth IRA: The remaining $2,000 goes here.
2. Adrian
* Salary: $55,000
* Target (15%): $55,000 × 0.15 = $8,250
* Match: 1:2 up to 6%. (This means for every $2 Adrian puts in, the company gives $1. To get the full match, Adrian must contribute 6%).
* Adrian contributes 6% ($3,300). Company matches half of that (3% or $1,650).
* 401(k) Total: $3,300 (Adrian) + $1,650 (Company) = $4,950
* Remaining: $8,250 (Target) - $4,950 (401k) = $3,300
* Roth IRA: The remaining $3,300 goes here.
3. Tyler and Aliyah
* Salary: $105,000
* Target (15%): $105,000 × 0.15 = $15,750
* Match: No Match.
* 401(k): $0
* Roth IRA: Since there is no match to worry about, the entire 15% goes here. $15,750
4. Gabrielle
* Salary: $145,000
* Target (15%): $145,000 × 0.15 = $21,750
* Match: 1:1 up to 3%.
* Gabrielle contributes 3% ($4,350). Company matches 3% ($4,350).
* 401(k) Total: $4,350 (Gabrielle) + $4,350 (Company) = $8,700
* Remaining: $21,750 (Target) - $8,700 (401k) = $13,050
* Roth IRA: The remaining $13,050 goes here.
5. Jayden and Britney
* Salary: $150,000
* Target (15%): $150,000 × 0.15 = $22,500
* Match: No Match.
* 401(k): $0
* Roth IRA: Entire amount goes here. $22,500
6. Cameron
* Salary: $35,000
* Target (15%): $35,000 × 0.15 = $5,250
* Match: 2:1 up to 6%. (This is a great match! For every $1 Cameron puts in, the company gives $2. To get the full match, Cameron contributes 6%, and the company contributes 12%).
* Cameron contributes 6% ($2,100). Company matches double that (12% or $4,200).
* 401(k) Total: $2,100 (Cameron) + $4,200 (Company) = $6,300
* Check: Wait! The total in the 401(k) is $6,300. This is *more* than Cameron's target of $5,250.
* Adjustment: Cameron only needs to invest a total of $5,250. Because the company match is so high, Cameron doesn't need to contribute the full 6% personally to hit the 15% household goal. However, usually, you take the full match if available. Let's look at the "Total Annual Investment" column. That column sums everything up.
* If Cameron contributes 6% ($2,100) and gets the match ($4,200), the total invested is $6,300. This exceeds the 15% rule.
* *Alternative Interpretation:* Usually, these problems assume you take the free money first. If we strictly follow "Invest 15% of income," Cameron might reduce their personal contribution. But typically, "Company Match" implies free money on top. Let's stick to the standard method: Take the full match.
* Actually, looking at the pattern, if the 401(k) total exceeds the 15% goal, the "Total Annual Investment" will just be higher than 15%. OR, Cameron reduces their personal contribution.
* Let's re-read carefully: "Assume each person... is investing 15%." This usually refers to *their own money*. But the column says "Total Annual Investment."
* Let's look at Cameron again. Target = $5,250.
* If Cameron puts in $1,750 (5%), Company puts in $3,500 (10%). Total = $5,250. This hits the 15% mark exactly. But the match is "up to 6%". If Cameron only puts in 5%, they leave free money on the table? No, the match is 2:1.
* Let's try this: Cameron wants $5,250 total invested.
* Let $x$ be Cameron's contribution. Company gives $2x$. Total = $3x$.
* $3x = 5,250$. $x = 1,750$.
* $1,750$ is 5% of $35,000$. This is within the "up to 6%" limit.
* So, Cameron contributes $1,750. Company contributes $3,500.
* 401(k) Total: $5,250
* Roth IRA: $0 (Goal met).
7. Mariana
* Salary: $28,000
* Target (15%): $28,000 × 0.15 = $4,200
* Match: No Match.
* 401(k): $0
* Roth IRA: Entire amount goes here. $4,200
──────────────────────────────────────
Final Answer:
| INVESTMENT | ANNUAL SALARY | COMPANY MATCH | 401(K) | ROTH IRA | TOTAL ANNUAL INVESTMENT |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Noa | $40,000 | 1:1 up to 5% | $4,000 | $2,000 | $6,000 |
| Adrian | $55,000 | 1:2 up to 6% | $4,950 | $3,300 | $8,250 |
| Tyler and Aliyah | $105,000 | No Match | $0 | $15,750 | $15,750 |
| Gabrielle | $145,000 | 1:1 up to 3% | $8,700 | $13,050 | $21,750 |
| Jayden and Britney| $150,000 | No Match | $0 | $22,500 | $22,500 |
| Cameron | $35,000 | 2:1 up to 6% | $5,250 | $0 | $5,250 |
| Mariana | $28,000 | No Match | $0 | $4,200 | $4,200 |
The Rules:
1. Total Investment Goal: Everyone invests 15% of their Annual Salary.
2. Order of Contributions: We follow a standard financial order:
* Step 1: Contribute enough to the 401(k) to get the full Company Match. (Free money!)
* Step 2: If there is still money left from the 15% goal, put it into a Roth IRA.
* Step 3: If the Roth IRA is maxed out (or if we are just filling the gap), any remaining amount goes back into the 401(k).
* *Note for this chart:* Since no Roth IRA limits are given, we will simply put any leftover money after the match into the Roth IRA column to reach the 15% total.
Calculations Breakdown:
1. Noa
* Salary: $40,000
* Target (15%): $40,000 × 0.15 = $6,000
* Match: 1:1 up to 5%.
* Noa contributes 5% ($2,000). Company matches 5% ($2,000).
* 401(k) Total: $2,000 (Noa) + $2,000 (Company) = $4,000
* Remaining: $6,000 (Target) - $4,000 (401k) = $2,000
* Roth IRA: The remaining $2,000 goes here.
2. Adrian
* Salary: $55,000
* Target (15%): $55,000 × 0.15 = $8,250
* Match: 1:2 up to 6%. (This means for every $2 Adrian puts in, the company gives $1. To get the full match, Adrian must contribute 6%).
* Adrian contributes 6% ($3,300). Company matches half of that (3% or $1,650).
* 401(k) Total: $3,300 (Adrian) + $1,650 (Company) = $4,950
* Remaining: $8,250 (Target) - $4,950 (401k) = $3,300
* Roth IRA: The remaining $3,300 goes here.
3. Tyler and Aliyah
* Salary: $105,000
* Target (15%): $105,000 × 0.15 = $15,750
* Match: No Match.
* 401(k): $0
* Roth IRA: Since there is no match to worry about, the entire 15% goes here. $15,750
4. Gabrielle
* Salary: $145,000
* Target (15%): $145,000 × 0.15 = $21,750
* Match: 1:1 up to 3%.
* Gabrielle contributes 3% ($4,350). Company matches 3% ($4,350).
* 401(k) Total: $4,350 (Gabrielle) + $4,350 (Company) = $8,700
* Remaining: $21,750 (Target) - $8,700 (401k) = $13,050
* Roth IRA: The remaining $13,050 goes here.
5. Jayden and Britney
* Salary: $150,000
* Target (15%): $150,000 × 0.15 = $22,500
* Match: No Match.
* 401(k): $0
* Roth IRA: Entire amount goes here. $22,500
6. Cameron
* Salary: $35,000
* Target (15%): $35,000 × 0.15 = $5,250
* Match: 2:1 up to 6%. (This is a great match! For every $1 Cameron puts in, the company gives $2. To get the full match, Cameron contributes 6%, and the company contributes 12%).
* Cameron contributes 6% ($2,100). Company matches double that (12% or $4,200).
* 401(k) Total: $2,100 (Cameron) + $4,200 (Company) = $6,300
* Check: Wait! The total in the 401(k) is $6,300. This is *more* than Cameron's target of $5,250.
* Adjustment: Cameron only needs to invest a total of $5,250. Because the company match is so high, Cameron doesn't need to contribute the full 6% personally to hit the 15% household goal. However, usually, you take the full match if available. Let's look at the "Total Annual Investment" column. That column sums everything up.
* If Cameron contributes 6% ($2,100) and gets the match ($4,200), the total invested is $6,300. This exceeds the 15% rule.
* *Alternative Interpretation:* Usually, these problems assume you take the free money first. If we strictly follow "Invest 15% of income," Cameron might reduce their personal contribution. But typically, "Company Match" implies free money on top. Let's stick to the standard method: Take the full match.
* Actually, looking at the pattern, if the 401(k) total exceeds the 15% goal, the "Total Annual Investment" will just be higher than 15%. OR, Cameron reduces their personal contribution.
* Let's re-read carefully: "Assume each person... is investing 15%." This usually refers to *their own money*. But the column says "Total Annual Investment."
* Let's look at Cameron again. Target = $5,250.
* If Cameron puts in $1,750 (5%), Company puts in $3,500 (10%). Total = $5,250. This hits the 15% mark exactly. But the match is "up to 6%". If Cameron only puts in 5%, they leave free money on the table? No, the match is 2:1.
* Let's try this: Cameron wants $5,250 total invested.
* Let $x$ be Cameron's contribution. Company gives $2x$. Total = $3x$.
* $3x = 5,250$. $x = 1,750$.
* $1,750$ is 5% of $35,000$. This is within the "up to 6%" limit.
* So, Cameron contributes $1,750. Company contributes $3,500.
* 401(k) Total: $5,250
* Roth IRA: $0 (Goal met).
7. Mariana
* Salary: $28,000
* Target (15%): $28,000 × 0.15 = $4,200
* Match: No Match.
* 401(k): $0
* Roth IRA: Entire amount goes here. $4,200
──────────────────────────────────────
Final Answer:
| INVESTMENT | ANNUAL SALARY | COMPANY MATCH | 401(K) | ROTH IRA | TOTAL ANNUAL INVESTMENT |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Noa | $40,000 | 1:1 up to 5% | $4,000 | $2,000 | $6,000 |
| Adrian | $55,000 | 1:2 up to 6% | $4,950 | $3,300 | $8,250 |
| Tyler and Aliyah | $105,000 | No Match | $0 | $15,750 | $15,750 |
| Gabrielle | $145,000 | 1:1 up to 3% | $8,700 | $13,050 | $21,750 |
| Jayden and Britney| $150,000 | No Match | $0 | $22,500 | $22,500 |
| Cameron | $35,000 | 2:1 up to 6% | $5,250 | $0 | $5,250 |
| Mariana | $28,000 | No Match | $0 | $4,200 | $4,200 |
Parent Tip: Review the logic above to help your child master the concept of roth ira worksheet.
