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Exercise 11-11 (LO.5) Meredith, who is single, would like to contribute $6,000 to her Roth IRA. Her AGI is $125,000. In your computations, round any
Exercise 11-11 (LO.5) Meredith, who is single, would like to contribute $6,000 to her Roth IRA. Her AGI is $125,000. In your computations, round any division to four decimal places. Round your final answers to the nearest dollar. a. What is the maximum amount that Meredith can contribute? 6,000 x Feedback Check My Work Introduced by Congress to encourage individual savings, a Roth IRA is a nondeductible alternative to the traditional deductible IRA. Earnings inside a Roth IRA are not taxable, and all qualified distributions from a Roth IRA are tax-free. b. Assume that Meredith's AGI is $100,000. She plans to put $5,000 each year into her Roth IRA, hoping to earn 5% annually. What future value will accumulate in her Roth at the end of 20 years? The future value of an ordinary annuity at 5% for 20 years is 36.7856. 220,713.6 x Feedback Check My Work Incorrect C. In part (b), instead assume that Meredith puts the $6,000 into the Roth for 15 years at 5%. How much will accumulate at the end of this period? The future value of an ordinary annuity at 5% for 15 years is 23.2760. 139,656
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