Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Mathematics

Authors: Charles MillerStanley SalzmanStanley SalzmanGary Clendenen

11th Edition

0321500121, 9780321500120

More Books

Students also viewed these Finance questions

Question

Why does a country s stage of development matter?

Answered: 1 week ago

Question

Mortality rate

Answered: 1 week ago

Question

Armed conflicts.

Answered: 1 week ago