Reply to Why max out 401k?

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Reply to "Why max out 401k?"

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[quote=Anonymous][quote=Anonymous]I max mine because it’s one of the limited ways to reduce my currently taxable income. I assume my tax rate at retirement will be lower.[/quote]

I am the business owner who asked above how much to invest in solo 401k. Just ran the numbers assuming no inflation and 3.4% annual market growth. It appears that in high inflation it makes no sense to contribute into 401 but rather keep reinvesting in my own business that has 11% annualized rate of return which beats inflation a little bit.

Any CPA/CFAs here to take a look? Am I right?

Tax deductions	               14000	30000	30000	30000	30000	30000	30000	30000	30000	254000
Federal income tax@21%	2940	         6300	6300	         6300	6300	         6300	6300	         6300	6300	         53340
DC income tax@10%	        1400	         3000	3000	         3000	3000	         3000	3000	         3000	3000	         25400
Investment income@3.4%	476	         1496	2516.       	3536	        4556	         5576	6596	         7616	8636	         41004
Total extra income	        4816	         10796	11816	12836	13856	14876	15896	16916	17936	119744
Income tax @exit@25%									                                                                         	63500
Net extra income 								                                                                                  		56244
Aggegate Return on investment								                                                                     		22%
Annual return (no inflation)					                                                                                                 		3%

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