Personal Finance Tax Update
13th Edition
ISBN: 9780357438947
Author: E. Thomas Garman; Raymond Forgue
Publisher: Cengage Learning US
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Question
Chapter 1, Problem 1BYOPFM
Summary Introduction
To explain: Whether an individual should contribute in flexible spending account or in a 401(k) retirement account.
Introduction:
Employment decisions:smart decisions about employee benefits can increase actual income 30 percent or more. Such decisions helps recognize regular investments to get long-term maximum earnings. An employee benefit is the general term for the indirect benefits one receives at work,it includes benefits like paid vacations sick days, health insurance, a retirement plan, child care, parental leave, and an educational assistance program. While some benefits are free, others will cost some money, but they also will save money.
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Your employer contributes $75 a week to your retirement plan. Assume that you work for your employer for another 20 yrears and that the applicable discount rate is 7.5 percent. Given these assumptions, what is this employee benefit worth to you today?
You have to decide whether or not to participate in the employer match program at your work. If you place 8% of your gross pay into a retirement account, your employer will match it. You plan to retire in 30 years. You expect to earn 6% return on your investment. How much will you have in the account if your average annual gross salary is $50,000?
A. $316,232.80
B. $22,973.96
C. $45,947.92
D. $632,465.60
Using the same information as the previous question, assume that you want to increase your portion of the contribution to 10%. The employer will only match up to 8%. How much would you have in this situation?
A. $692,523.80
B. $711,523.80
C. $316,232.80
D. $632,465.60
Use Exhibit 14.2 to estimate the average Social Security benefits for a retired couple. Assume that one spouse has a part-time job that pays $28,000 a year, and that this person also receives another $47,000 a year from a company pension. Assume, that the earnings limit was $17,040 per year. Also assume for Social Security benefits the recipients are aged below 67 and will lose $1 in benefits for every $2 they earn above the earnings test amount. Also assume that they would have to pay taxes of 50% on a combined income between $32,000 and $44,000, of their Social Security benefits. If their combined income is more than $44,000, up to 85% of their Social Security benefits is subject to income tax. Round your answer to the nearest dollar.$ __________
Based on current policies, would this couple be liable for any tax on their Social Security income?-Select: YES or NO
Chapter 1 Solutions
Personal Finance Tax Update
Ch. 1.1 - Prob. 1CCCh. 1.1 - Prob. 2CCCh. 1.1 - Prob. 3CCCh. 1.1 - Prob. 4CCCh. 1.2 - Prob. 1CCCh. 1.2 - Prob. 2CCCh. 1.2 - Prob. 3CCCh. 1.3 - Prob. 1CCCh. 1.3 - Prob. 2CCCh. 1.3 - Prob. 3CC
Ch. 1.4 - Prob. 1CCCh. 1.4 - Prob. 2CCCh. 1.4 - Prob. 3CCCh. 1.5 - Prob. 1CCCh. 1.5 - Prob. 2CCCh. 1.5 - Prob. 3CCCh. 1.5 - Prob. 4CCCh. 1.6 - Prob. 1CCCh. 1.6 - Prob. 2CCCh. 1.6 - Prob. 3CCCh. 1.6 - Prob. 4CCCh. 1 - Real Income. Joshua Vermier of Sacramento,...Ch. 1 - Prob. 2DTMCh. 1 - Prob. 3DTMCh. 1 - Prob. 4DTMCh. 1 - Using the present and future value tables in...Ch. 1 - Inflation. Laureen Mauers salary a year ago was...Ch. 1 - Prob. 7DTMCh. 1 - Prob. 8DTMCh. 1 - Prob. 9DTMCh. 1 - Prob. 1FPCCh. 1 - Victor and Maria Hernandez Look at Future Income...Ch. 1 - Prob. 3FPCCh. 1 - Prob. 4FPCCh. 1 - Prob. 5FPCCh. 1 - Prob. 1BYOPFMCh. 1 - Prob. 3BYOPFMCh. 1 - Prob. 4BYOPFMCh. 1 - Present Value of a Lump Sum. Complete Worksheet 4:...Ch. 1 - Prob. 6BYOPFM
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