The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed, but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement. a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%. (Round your answers to 2 decimal place.) > Answer is complete but not entirely correct. 20-year consumption stream (assuming monthly payouts) $ 826.29 X
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- The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement.a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%.b. What will be your 20-year retirement consumption stream if you choose to save in a Roth IRA? c. Which provides better expected results if you expect your tax rate to decrease from 30% today to 25% at retirement?The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed, but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement. a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%. (Round your answers to 2 decimal place.) 20-year consumption stream (assuming monthly payouts) _________________ b. What will be your 20-year retirement consumption stream if you choose to save in a Roth IRA? (Round your answers to 2 decimal place.) 20-year consumption stream (assuming monthly payouts)_________________The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed, but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement. a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%. (Round your answers to 2 decimal place.) b. What will be your 20-year retirement consumption stream if you choose to save in a Roth IRA? (Round your answers to 2 decimal place.)
- The difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the income that is contributed, but the withdrawals at retirement are tax-free. In a traditional IRA, however, the contributions reduce your taxable income, but the withdrawals at retirement are taxable. Assume you plan to devote $5,000 to retirement savings in each year. You will retire in 30 years and expect to live for an additional 20 years after retirement. a. Assume the before-tax interest rate is 5%. What will be your after-tax 20-year retirement consumption stream if you choose to save in a traditional IRA? Assume your tax rate is fixed at 30%. (Round your answers to 2 decimal place.) > Answer is complete but not entirely correct. 20-year consumption stream (assuming monthly payouts) $ 27,462.69Early withdrawals from retirement plans may be subject to an extra tax (10 percent penalty). Which of the following claims about IRA payouts is correct?What happens if you withdraw funds from a traditional IRA before age 59 ? You earn a bonus. You incur a significant penalty. You have just made a required disbursement. You add to your retirement assets.
- Premature withdrawals from retirement plans may be subject to an extra tax (10 percent penalty). Which of the following claims about IRA distributions is correct?Sam has a retirement plan that pays him $25,000 a year for the remainder of his life. Which of the following is a true statement about this? O A. This is an annuity. O B. This is not an annuity because the payments are not equal. OC. This is not an annuity because we do not know how much Sam gets paid a month. O D. This is not an annuity because it is not for a predefined period.A self-employed person deposits $3,000 annually in a retirement account (called a Keogh or H.R. 10 plan) that earns 8 percent. How much additional money will be in the account if the saver defers retirement until age 70 and continues the contributions?
- A self employed person deposit $1,250 annually in a retirement account that earns 5.5 percent. What will be the account balance at age 62 if the savings program starts when the individual is age 50? How much additional money will be in the account if the saver defers retirement until age 66 and continue the annual contribution until then? How much additional money will be in the account if the saver discontinues the contributions at age 62, but let's it build up until retirement at age 66?In this question, consider that you are 60 years old and considering retirement. An insurance company offers to sell you the following Annuity in exchange for a portion of your IRA: • The Annuity commits to paying you 2,000 per month for the next 20 years, with the first payment to be made beginning one month from today. • Your price of the Annuity is $250,000 paid by you today from your IRA. The insurance company is rated AAA, but the investment is not FDIC insured like bank deposits. What is the expected annual rate of return on this investment? What is the Yield-on this investment? That is what is the annual expected rate of return? From an investment point of view, do you consider this a good investment today? Discuss why, or why not.Daniel knows that he can withdraw up to a maximum of $35,000 from his Registered Retirement Savings Plan (RRSP) under the Home Buyers Plan (HBP). He knows that he has to pay at least 1/15th of the amount that he borrows. Danieľ's RRSP market value is $45,680 on the day that he decides to withdraw $25,700 under the HBP for the down payment on his new home. What is the minimum annual amount that Daniel must repay to his RRSP on the amount he withdraws from the HBP? A $3,045.33 В $2,333.33 $5,000.00 D $1,713.33 E $3,433.33