Question

- Assume you make annual contributions to a Roth IRA of $1,250
per year beginning on your 25
^{th}birthday. Assume further that the account is projected to earn an annual return of 7.15% and that you will retire on your 65^{th}birthday. What is the projected balance in the account on the date of your retirement? Assume no contribution on your 65^{th}birthday. In other words, the last contribution occurs at the beginning of the 40^{th}year, on your 64^{th}birthday. - Assume you begin making the contributions above on your
35
^{th}birthday, rather than your 25^{th}birthday, but double the annual contribution to $2,500. What is the projected balance in the account on the date of your retirement? - If you wait until your 40
^{th}birthday to begin making contributions, how much do you have to contribute annually, to reach the same projected account balance on your 65^{th}birthday, as if you had begun contributing at age 25? NOTE – This problem can be solved using the PMT() function or Goal Seek.

Answer #1

Both nondeductible contributions to a traditional IRA and
contributions to a Roth IRA are similar in the sense that neither
provides a tax deduction at the date of contribution. Which of the
two types would be most advantageous to taxpayers and why?
Your client is about to establish his own business and hires at
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a qualified versus a non-qualified retirement plan. What do you
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Assume that you are 24 years old today, and that you are
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account. Your first contribution will be made on your
25th birthday and will be 10% of your salary of $50,000
at that time. You plan to put aside 10% of...

Today is your 40th birthday (this is beginning of period, i.e.,
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suggest that you will live to be 85. You want to move to Hawaii
when you retire (on your 65th birthday). You estimate that it will
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1) You graduate from college and get your first job. You open a
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promotion that brings your income to a level that disqualified you
from making further contributions to the Roth IRA. Construct a
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Assume that you are 30 years old today, and that you are
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annual contributions to a retirement account. Your first
contribution will be made on your 31st birthday and will be 9% of
this year's salary. Likewise, you expect to deposit...

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you can draw payments out for 25 years (with the first payment
taking place immediately upon your 65th birthday). Assume that all
your funds earn an 11% annual return. You will begin making
payments into your retirement account immediately and will make 41...

Assume that you are 30 years old today, and that you are
planning on retiring at age 65. Because your current salary is
$45,000 and You expect your salary to increase at a rate of 5% per
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making annual contributions to a retirement account. Your first
contribution will be made on your 31st birthday and will be 8% of
this year’s salary. Likewise, you expect the...

Today is your 40th birthday. You expect to retire at age 65, and
actuarial tables suggest that you will live to be 100. You want to
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HW17. Suppose that beginning on your 25th birthday, you put
$1,000 into a savings account, and you make a new $1000 deposit
every 3 months, up to and including your 45th birthday. The savings
account pays 6% annual interest, compounded quarterly. \\
a. How much money will be in the account on your 45th
birthday?
b. How much will your first $1000 deposit end up contributing to
the amount in your bank account, on your 45th birthday?
c. The total...

Assume that you are 30 years old today, and that you are
planning on retirement at age 65. Your current salary is $45,000
and you expect your salary to remain constant as long as you work.
To save for your retirement, you plan on making annual
contributions to a retirement account. Your first contribution will
be made on your 31st birthday and will be 8% of this year's
salary. Likewise, you expect to deposit 8% of your salary each...

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