Whatever benefit value, remember to gross-up for taxes

Whatever benefit value, remember to gross-up for taxes
by fortune_smith (2021-04-17 05:59:19)
Edited on 2021-04-17 06:02:27

In reply to: ND Scholarship Athetes - Benefits guesstimate posted by sdalenberg

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People who pay do so with after-tax income, whether they’re paying in real-time or with proceeds from after-tax investments they made in 529 plans many years ago.

So paying, say, $80k for a given year actually requires $120-130k of pre-tax earnings before taxation at 30-something percent, depending on tax bracket.

The benefits received are a form of “net” compensation and have a pre-tax-equivalent.

Replies:

you mean - tpm81 2021-04-17 14:05:22
- Effectively, yes, maybe even more .... - fortune_smith 2021-04-17 15:18:17