Deliverable Length: 2-3 page memo (include Excel spreadsheet)
A friend, Sal, wants to know how much he would save in taxes by contributing to his 401(K) plan. He can invest up to 10% of his income into the plan. His current income is US$50,000 per year, and he is in the 25% tax bracket.
In a memo to your friend that outlines how much he would save in taxes by contributing to his 401(K) plan. Include an Excel spreadsheet that provides answers for each of the following investment choices: 2%, 4%, 6%, 8%,and 10%. Additionally, provide Sal with other suggestions to minimize his taxes.
The solution describes how 401(k) contributions can lower tax burden and by what amount at varying levels of contribution.