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Team 4

Team 4. Personal Retirement 401K vs Profit Sharing. Bryant Borbon - Techie Katherine Kelley - Organizer Victor Nogin - Summarizer Trent Thompson - Summarizer. Company Matching Taxes are Deferred Ability to Roll-Over Easy to Manage Control of Investments Protected by Pension Laws.

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Team 4

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  1. Team 4 Personal Retirement 401K vs Profit Sharing • Bryant Borbon - Techie • Katherine Kelley - Organizer • Victor Nogin - Summarizer • Trent Thompson - Summarizer

  2. Company Matching Taxes are Deferred Ability to Roll-Over Easy to Manage Control of Investments Protected by Pension Laws 401K

  3. Profit Sharing • Know Amount you Receive • Employees Focus on Success • Supplemental to Salary • Profits could be Volatile • Focus on Profit could Compromise Quality • Hard to Manage Finances with Profit Swings

  4. Assumptions • Same Starting Salary of $62,000 • ROR on Investment – 8.0% • Number of Years Worked – 35 Years • Annual Raise of 4.0% • Both Plans will be Tax Deferred • Company Matches 5% of 401K • Constant Profit Percentage

  5. Scenario • 25 year old Cal Poly Graduate • Two similar job offers with equal benefits • Borley Inc. – 401k Plan • Nogson Co. – Profit Sharing • Which offer is more beneficial?

  6. Lifestyle of Living • Amount needed at retirement for various lifestyles

  7. Comparison

  8. Sensitivity Analysis

  9. Sensitivity Analysis

  10. Conclusion • Borley’s 401K is a better retirement option • Rate of Return prevails in Sensitivity Analysis • % Contributed by P.S. does not yield as much

  11. Resources • Websites http://www.nfib.com/object/3518245.html http://www.irs.gov/retirement/article/0,,id= 108948,00.html • Engineering Economic Analysis, Donald G. Newnan, Oxford University Press, USA; 10th edition (2009) • Personal Experience • Homework and Lecture Notes

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