Dustin Hansen is in his early 30s and is thinking about opening an IRA. He can't decide whether to open a traditional/deductible IRA or a Roth IRA, so he turns to you for help.

1. To support your explanation, you decide to run some comparative numbers on the two types of accounts; for starters, use a 25-year period to show Dustin what contributions of $5,000 (before taxes, if applicable) per year will amount to (after 25 years) given that he can earn, say, 8 percent on his money. Assume that the money are invested at the end of each year and that Dustin is in the 22 percent tax bracket (and will remain there for the next 25 years). Round your answers to the nearest dollar.

   Traditional IRA	$ _____
   Roth IRA	$ _____

   Will the type of account he opens have any impact on this amount? Select: (Yes/No)

2. Assuming that Dustin is in the 22 percent tax bracket (and will remain there for the next 25 years), determine the annual and total (over 25 years) tax savings he'll enjoy from the $5,000-a-year contributions to his IRA; contrast the (annual and total) tax savings he'd generate from a traditional IRA with those from a Roth IRA. If an answer is zero, enter "0". Round your answers to the nearest dollar.

   Traditional IRA annual tax savings:	$_____
   Roth IRA annual tax savings:	$_____
   Traditional IRA total tax savings:	$_____
   Roth IRA total tax savings:	$ _____

3. Now, fast-forward 25 years. Given the size of Dustin's account in 25 years (as computed in part a), assume that he takes it all out in one lump sum. If he's now in the 32 percent tax bracket, how much will he have, after taxes, with a traditional IRA as compared with a Roth IRA? Round your answers to the nearest dollar.

   Traditional IRA:	$ _____
   Roth IRA:	$ _____

   How do the taxes computed here compare with those computed in part b? Comment on your findings.

   d. Based on the numbers you have computed as well as any other factors, what kind of IRA would you recommend to Dustin? Maximum allowable annual contributions to IRAs are $6,000 for 2019 for those under 50 and $7,000 for those over 50. Would knowing that maximum contributions are scheduled to increase to $7,000 per year make any difference in your analysis? Explain.