E3-15. A taxpayer is about to receive a $1,000 bonus from her employer. She would like to put this bonus into a retirement account. She has come to you for advice as to whether she should put the $1,000 into a traditional deductible IRA or a Roth IRA. You learn that she faces a current marginal tax rate of 28% and expects to face the same rate in 40 years, when she plans to withdraw the funds at age 70. She expects to earn a pretax rate of return of 10% in either retirement account by investing the funds in corporate bonds. Advise the taxpayer as to what she should do.

E3-16. Assume the same facts as presented in E3-15, with the exception that the taxpayer expects her tax rate to be 20% when she retires in 40 years. What should the taxpayer do now?