I have a question and would appreciate any help from the Fools here. DH is interviewing for a new position - it's a long term consulting position. He's a consultant now, but the new company apparently takes a much lower chunk of his hourly rate than his existing one.Anyway, that's not the question. The new company offers him two pay options: 1) they pay him net, remit all his taxes, offer him healthcare benefits, and a 401(k) with 50% of first 6% match or 2) they give him $7 more an hour, but all tax remittance is our responsibility, his health insurance is his responsibility, and there is no 401(k).So, in the table below, I've included 40 hours for 4 weeks at the two pay levels. I've added the 3% match to the lower as an increase. I've assumed $38 bi monthly for his premiums (that's same as mine) or the additional $51 adding him to my plan would cost for option 2. Finally, I've subtracted the lost tax benefit of the $14K 401(k) contribution if he takes option 2. I realize he can utilize a TIRA, but then loses the Roth option, so I've left it out. And, it's only $3K per year. $45/hr $52/hr Pay per month 7,200 8,320 3% 401-k match 216 0 Health Insurance (76) (102) Lack of 401-k tax 0 (2,800) >assumes $14K contrib. (20% tax) 7,340 5,418 Without looking at any numbers, he just gut-feeling believes option 1 is better - less hassle with taxes, SS, etc. and the 401(k). After running the number, I think I agree.Are we missing anything? If my calculations are correct, it appears it doesn't break even until he gets to a $19/hour differential. Seems odd.I guess it could work if he set up a separate company and formed a SEP IRA?TIA3MM
$45/hr $52/hr Pay per month 7,200 8,320 3% 401-k match 216 0 Health Insurance (76) (102) Lack of 401-k tax 0 (2,800) >assumes $14K contrib. (20% tax) 7,340 5,418
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