10. Benefits of traditional and Roth 401(k) plans Traditional 401(k) versus Roth 401(k) Felix has decided to contribute to a savings program. He can open a traditional 401(k) or a Roth 401(k) and has determined that he can afford a $15,600 contribution. Felix's salary is $130,500 per year, and he is in the 28% tax bracket. If Felix decides to go with a traditional 401(k), his contribution amount will be s And the amount offset via a reduced tax bill will be s If, instead, Felix decides to go with a Roth 401(k), his contribution amount will be s And the amount offset via a reduced tax bill will be s Assuming all the same facts, suppose that Felix decides to ope both 401(k) plans, splitting what he can afford to contribute equally between both plans. Under this scenario, Felix's contribution amount will be s And the amount offset via a reduced tax bill will be s When Felix retires, which plan's monies will he be able to exclude from taxable income? Traditional 401(k) Roth 401(k)
10. Benefits of traditional and Roth 401(k) plans Traditional 401(k) versus Roth 401(k) Felix has decided to contribute to a savings program. He can open a traditional 401(k) or a Roth 401(k) and has determined that he can afford a $15,600 contribution. Felix's salary is $130,500 per year, and he is in the 28% tax bracket. If Felix decides to go with a traditional 401(k), his contribution amount will be s And the amount offset via a reduced tax bill will be s If, instead, Felix decides to go with a Roth 401(k), his contribution amount will be s And the amount offset via a reduced tax bill will be s Assuming all the same facts, suppose that Felix decides to ope both 401(k) plans, splitting what he can afford to contribute equally between both plans. Under this scenario, Felix's contribution amount will be s And the amount offset via a reduced tax bill will be s When Felix retires, which plan's monies will he be able to exclude from taxable income? Traditional 401(k) Roth 401(k)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:10. Benefits of traditional and Roth 401(k) plans
Traditional 401(k) versus Roth 401(k)
Felix has decided to contribute to a savings program. He can open a traditional 401(k) or a Roth 401(k) and has determined that he can afford a
$15,600 contribution. Felix's salary is $130,500 per year, and he is in the 28% tax bracket.
If Felix decides to go with a traditional 401(k), his contribution amount will be s
And the amount offset via a reduced tax bill will be s
If, instead, Felix decides to go with a Roth 401(k), his contribution amount will be s
And the amount offset via a reduced tax bill will be s
Assuming all the same facts, suppose that Felix decides to open both 401(k) plans, splitting what he can afford to contribute equally between both
plans.
Under this scenario, Felix's contribution amount will be s
And the amount offset via a reduced tax bill will be s
When Felix retires, which plan's monies will he be able to exclude from taxable income?
Traditional 401(k)
Roth 401(k)
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