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

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

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

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

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

Lifestyle of Living Amount needed at retirement for various lifestyles

Comparison

Sensitivity Analysis

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

Resources Websites Websites ,00.html ,00.html Engineering Economic Analysis, Donald G. Newnan, Oxford University Press, USA; 10th edition (2009) Engineering Economic Analysis, Donald G. Newnan, Oxford University Press, USA; 10th edition (2009) Personal Experience Personal Experience Homework and Lecture Notes Homework and Lecture Notes