Tyler & Megan have a combined income of $105,000 per year. Neither Tyler's or Megan's employers have a matching plan.

Question

Tyler & Megan have a combined income of $105,000 per year. Neither Tyler's or Megan's employers have a matching plan.

 

• Each person will invest 15% of his/her income
• If the person has a company match program, invest in the 401k first.
• Above the company match, fund the Roth IRAs.
• If there is not a company match program, fund the Roth IRA first
• Maximum allowable limits on Roth IRAs is $10,000 per year

 

What is Tyler & Megan's total annual investment?

How much should they contribute to the 401(k)?

How much should they contribute to Roth IRAs?

Answer 1

Each person has $105,00 * .15 = 15,750.

 

Based on the rules the max in each IRA is 10,000 the rest in each one goes to the 401K since no match which is $5750