Question

Janessa is 29 years old and she is about to start her first full-time job. She is currently single, and she is willing to take the appropriate risk she needs to prepare for retirement. Her starting annual salary is $63,000 and she has no retirement savings yet. Her employer will match 100% of her contributions up to the first 4% of her salary to the company’s 401(k) account. Use this link to determine his retirement saving needs: http://money.cnn.com/tools/saveyoung/index.html The information below accompanies the table (on page 2):

Step 1: What amount do you recommend Janessa should be saving each year? Use this amount in the “Total” box in the table below. $7,371

Step 2: How much of the total annual savings should he be saving in his 401(k), a Traditional IRA, and/or a ROTH IRA? Put these amounts in the table in the “Amount” column.

Step 3: Why did you pick each amount? Put your explanation in the “Why did you choose this amount” section of the table.

Step 4: Employer offers the following 401(k) Investment Vehicle choices: Davis New York Venture Fund Class Y [DNVYX] Aberdeen Select International Equity Fund Class [JIEIX] Janus Asia Equity Fund Class A [JAQAX] Research a fund analyzer to look up and compare the funds Janessa has to choose from within his employer’s 401(k) plan. (focus on the fees, profits/losses). The following Traditional or Roth IRA choices: Target Date Fund Apple Stock 10 Year Treasury Note Your own choice (you must explain why) Pick the most appropriate choice from the lists above for the investment vehicles. Then type your choice in the “Investment Vehicle Choice” section of the table. Please note that when you finish the table, all the boxes may or may not contain data. It is OK to have N/A or zeros in some of the boxes as long as you provide your rationale as to why you put zero(s).

Step 5: Why did you pick each fund? Put your explanation in the “Why did you choose this fund” section of the table

Answer #1

1.

Amount Jenessa will save every year:

Amount offered by employer = %contribution x annual salary

= 4/100 x 63000

=.04 x 63000

= 2520

Hence, Jenessa will give $2520.

2.

Determine the amount of total annual savings that she would be saving in her 401(k) account;

Jenessa's total savings will be $4520 in which $2520 will be for 401(k) plan of the company.

3.

In the given case, there is an average return of 12% annually over the years. Assuming employer retires at 65, means she has 40 years to contribute for retirement.

formula =FV(.12,40,2520*2)

= 3866140.76

Amount of IRA

formula =FV(.12,40,2000)

=1534182.84

Employers total savings will be (3866140.76+1534182.84+1534182.84) $6934506.44

Janessa is 29 years old and she is about to start her first
full-time job. She is currently single and she is willing to take
the appropriate risk she needs to prepare for retirement. Her
starting annual salary is $63,000 and she has no retirement savings
yet. Her employer will match 100% of her contributions up to the
first 4% of her salary to the company's 401 (K) account.
Question:
1. What amount should Janessa should be saving each year?...

1) This week, you learned about traditional IRAs and Roth IRAs.
What are the unique features of a Roth IRA? Why is
the Roth IRA worth considering, particularly when you begin to save
for your retirement early in your professional career?
2) Many of you will participate in an employer’s 401(k) profit
sharing plan once you begin work after graduation. This plan allows
you to make pre-tax deferrals into the qualified plan, often with
employer matching dollars. What does “employer...

One of the simplest tax avoidance strategies is to contribute to
a Roth IRA, although this may not be right for everyone. Some
individuals, particularly low-income households that may be
eligible for tax credits because of young children in the home, may
benefit more from contributions to a traditional IRA. Here, you
want to help Susan identify the best retirement savings option for
her situation.
Susan is 25, single, and makes $42,000 a year. Susan does not have
access to...

4. Amy is single. During 2019, she determined her adjusted gross
income was $12,000. During the year, Amy also contributed $1,500 to
a Roth IRA. What is the maximum saver's credit she may claim for
the year?
Multiple Choice
$750.
$1,000.
$1,500.
$0.
6, Kathy is 48 years of age and self-employed. During 2019, she
reported $100,000 of revenues and $40,000 of expenses relating to
her self-employment activities. If Kathy has no other retirement
accounts in her name, what is...

One of the simplest tax avoidance strategies is to contribute to
a Roth IRA, although this may not be right for everyone. Some
individuals, particularly low-income households that may be
eligible for tax credits because of young children in the home, may
benefit more from contributions to a traditional IRA. Here, you
want to help Debra identify the best retirement savings option for
her situation.
Debra is 25, single, and makes $42,000 a year. Debra does not have
access to...

1) Martha (53) works part-time, in addition, she is taking
classes at the local university. This year, Martha was enrolled in
seven hours for one semester and three for another.The university
considers 12 credit hours to be full time. Martha deferred $4000 of
compensation through her employer's 401(k) plan. Her AGI for 2018
was $30,500. How much is Martha's Saver's Credit, assuming no tax
liability limit applies?
A) $0 B) $400 C)$800 D)$2,000
2) Jack and Kendra are married and...

Your friend is celebrating her 35th birthday today wants to
start saving for her anticipated retirement at age 65. She wants to
be able to withdraw $105,000 from her savings account on each
birthday for 20 years following her retirement; the first
withdrawal will be on her 66th birthday. Your friend intends to
invest her money in the local credit union, which offer 7 percent
interest per year. She wants to make equal annual payments on each
birthday into the...

Your client is 29 years old. She wants to begin saving for
retirement, with the first payment to come one year from now. She
can save $8,000 per year, and you advise her to invest it in the
stock market, which you expect to provide an average return of 12%
in the future.
A.If she follows your advice, how much money will she have at
65? Round your answer to the nearest cent.
B. How much will she have at...

Kerri is 35 years old and is pregnant. She is in her
first trimester and wants to continue her exercise program. She has
permission from her physician to continue. She currently runs 3-4
times per week (12-15 miles total). She works all of her muscle
groups with resistance training twice per week.
Her friend who is really into fitness and has read a lot
on the internet has made some suggestions for her training program.
She will continue to run...

Mrs. Cora Yank (age 42) is divorced and has full custody of her
10-year-old son, William.
Mrs. Yank works as a medical technician in a Chicago hospital.
Her salary was $38,400, from which her employer withheld $1,045
federal income tax and $2,938 employee FICA tax.
Several years ago, Mrs. Yank was seriously injured in a traffic
accident caused by another driver’s negligence. This year, she
received a $25,000 settlement from the driver’s insurance company:
$20,000 as compensation for her physical...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 1 minute ago

asked 2 minutes ago

asked 2 minutes ago

asked 2 minutes ago

asked 4 minutes ago

asked 4 minutes ago

asked 6 minutes ago

asked 9 minutes ago

asked 17 minutes ago

asked 17 minutes ago

asked 18 minutes ago