Question
In 2016, Nitai (age 40) contributes 10 percent of his $100,000 annual salary to a Roth 401(k) account sponsored by his employer, AY Inc. AY
In 2016, Nitai (age 40) contributes 10 percent of his $100,000 annual salary to a Roth 401(k) account sponsored by his employer, AY Inc. AY Inc. matches employee contributions dollar for dollar up to 10 percent of the employees salary to the employees traditional 401(k) account. Nitai expects to earn a 7 percent before-tax rate of return.
Assume he leaves his contributions in the Roth 401(k) and traditional 401(k) accounts until he retires in 25 years and that he makes no additional contributions to either account. What are Nitais after-tax proceeds from the Roth 401(k) and traditional 401(k) accounts after he receives the distributions assuming his marginal tax rate at retirement is 30 percent? (UseTable 1,Table 2,Table 3,Table 4.)(Do not round intermediate calculations.Round "Future value factor" to 4 decimal places.Round your answer to the nearest dollar amount.)
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