Required information. [The following information applies to the questions displayed below.) John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.
Required information. [The following information applies to the questions displayed below.) John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject: accounting
Transcribed Image Text:3
of 3
Required information
[The following information applies to the questions displayed below.)
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution
to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that
his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for
30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1)
Note: Do not round intermediate calculations, Round your final answers to nearest whole dollar amount.
a. How much will John accumulate after taxes if he contributes to a Roth IRA (consider only the funds contributed to the Roth IRA)?
Answer is complete but not entirely correct.
After tax accumulation
$ 21,339
![Required information.
[The following information applies to the questions displayed below.]
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution
to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that
his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for
30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1)
Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.
b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the
traditional IRA)?
After tax accumulation](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8fc66754-dc05-453a-a4c8-c79196bcb5d1%2F8c2ac6b4-7bb4-4c71-9f65-341f683108af%2Fknn7ksh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information.
[The following information applies to the questions displayed below.]
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution
to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that
his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for
30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1)
Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.
b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the
traditional IRA)?
After tax accumulation
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