# 2010 AM IPS - contribution to TDA

Lima’s current pre tax annual compensation - US \$ 140,000

If I do post tax here @ 25% = 140,000 * (1-25%) = US \$ 105,000 minus the current annual living expenses 96,000 = 9000-----> this is the amount i can contribute to TDA account annually

Guideline answer done it different way----annual living expense = \$ 96,000----Gross it up for tax = 96,000 / 0.75 = \$128,000

So pre tax income 140,000 - 128000 = \$ 12000 I can contribute to my TDA account???

and that is what it says elsewhere… she contributes 12K to her TDA.

remember TDA contrib is before tax contrib.

^ ya though I included 12k contribution to TDA & got the return calculation rt…but the way they have explained was confusing hence asked…

both numbers work out.

12K provided directly

140 - 96/(0.75) = 12 K

end result - nothing left over from Salary after contrib to the TDA.

So the Investment portfolio does not grow due to another inflow every period … remains at 225K to start with.

With it growing by an amount every period - it would have been very difficult to solve for the IRR.

^ thanks as always