Tax-deferred annuities pay no taxes on the income placed into the account but then pay taxes on all the money when it its withdrawn. Nondeferred plans pay taxes on the income prior to depositingthe money into the account and then only pay taxes on the interest earned by the account. Given the amount set aside in an ordinary annuity each month, the current tax rate, the number of yearsthat contributions will be made to the annuity, and the tax rate when withdraws from the annuity are made, complete parts a through cCurrent TaxRate20%Monthly Number of Annual InterestPayment Years$60035Rate2.9%Future TaxRate35%a. Find the value of the tax-deferred and the nondeferred accountsThe future value of the tax-deferred account is $account is $The future value of the nondeferred(Round to the nearest cent as needed.)Om

Future value of amount include the amount that is being deposited and amount of interest accumulated…

Answered: Tax-deferred annutes pay no taxes

Business

Accounting

Tax-deferred annutes pay no taxes

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Tax-deferred annuities pay no taxes on the income placed into the account but then pay taxes on all the money when it its withdrawn. Nondeferred plans pay taxes on the income prior to depositing
the money into the account and then only pay taxes on the interest earned by the account. Given the amount set aside in an ordinary annuity each month, the current tax rate, the number of years
that contributions will be made to the annuity, and the tax rate when withdraws from the annuity are made, complete parts a through c
Current Tax
Rate
20%
Monthly Number of Annual Interest
Payment Years
$600
35
Rate
2.9%
Future Tax
Rate
35%
a. Find the value of the tax-deferred and the nondeferred accounts
The future value of the tax-deferred account is $
account is $
The future value of the nondeferred
(Round to the nearest cent as needed.)
Om

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