Retirement Planning Your new client, Dave, calls you with these two questions (1) I'm now 30 years old. Sixty seems to be a good target for retirement age. I suppose I could start saving for retirement now at, say, $12,000 per year for the next 30 years, but that's a lot of beer money l'd lose. Wouldn't I be just as well off to just wait another 15 years and double-up on my annual savings ($24,000 per year for the last 15 years) and be in the same position? (2) Iwas listening to NPR's Weekend Marketplace on the drive home and they were talking about beinng sure to fund our 401(k) plans. If I decide to begin saving for retirement now, how do I choose between the "traditional and the Roth versions offered by my employer? All I can afford for the contribution and any income taxes (in total) is $12,000. REQUIRED Write a clear and concise client letter to Dave that separately addresses each of his two questions. Your explanations must include numerical illustrations to explain the differences between the alternatives in each of his questions. Question (2) is worth 8 of the 10 points. In responding to this question, you must (1) describe the basic treatment of the two alternatives traditional and Roth 401 (k) plans. What I'm looking for here is a clear explanation of why the annual funding might be different because of any tax preferential treatment, when and how earnings may be taxed, and what at rate those earnings would be taxed.; and (2) compare his expected after-tax retirement fund balances from the two alternatives (traditional and Roth) for each of the three scenarios below. You must include tables detailing your calculations in a clear and concise manner. For all three scenarios, you must assume the following information: Anticipated marginal tax rate until retirement is 25% (Federal and state) .Annual total commitment of $12,000 per year (in pre-tax dollars) until he retires in 30 years (note that you must convert the $12,000 into an after-tax amount for any contributions that are not excludible from current gross income) Annual earnings rates in all funds are 5% (before- tax rate) Scenario #1 Anticipated marginal tax rate at retirement is 30% (Federal and state) Scenario #2 Anticipated marginal tax rate at retirement is 20% (Federal and state) Scenario #3 Given the current political & economic climate, Dave is uncertain about his anticipated marginal tax rate at retirement. However, he gives you probability assessments of (1) 50% probability of a 30% marginal tax rate at retirement; and (2) 50% probability of a 20% marginal tax rate at retirement Retirement Planning Your new client, Dave, calls you with these two questions (1) I'm now 30 years old. Sixty seems to be a good target for retirement age. I suppose I could start saving for retirement now at, say, $12,000 per year for the next 30 years, but that's a lot of beer money l'd lose. Wouldn't I be just as well off to just wait another 15 years and double-up on my annual savings ($24,000 per year for the last 15 years) and be in the same position? (2) Iwas listening to NPR's Weekend Marketplace on the drive home and they were talking about beinng sure to fund our 401(k) plans. If I decide to begin saving for retirement now, how do I choose between the "traditional and the Roth versions offered by my employer? All I can afford for the contribution and any income taxes (in total) is $12,000. REQUIRED Write a clear and concise client letter to Dave that separately addresses each of his two questions. Your explanations must include numerical illustrations to explain the differences between the alternatives in each of his questions. Question (2) is worth 8 of the 10 points. In responding to this question, you must (1) describe the basic treatment of the two alternatives traditional and Roth 401 (k) plans. What I'm looking for here is a clear explanation of why the annual funding might be different because of any tax preferential treatment, when and how earnings may be taxed, and what at rate those earnings would be taxed.; and (2) compare his expected after-tax retirement fund balances from the two alternatives (traditional and Roth) for each of the three scenarios below. You must include tables detailing your calculations in a clear and concise manner. For all three scenarios, you must assume the following information: Anticipated marginal tax rate until retirement is 25% (Federal and state) .Annual total commitment of $12,000 per year (in pre-tax dollars) until he retires in 30 years (note that you must convert the $12,000 into an after-tax amount for any contributions that are not excludible from current gross income) Annual earnings rates in all funds are 5% (before- tax rate) Scenario #1 Anticipated marginal tax rate at retirement is 30% (Federal and state) Scenario #2 Anticipated marginal tax rate at retirement is 20% (Federal and state) Scenario #3 Given the current political & economic climate, Dave is uncertain about his anticipated marginal tax rate at retirement. However, he gives you probability assessments of (1) 50% probability of a 30% marginal tax rate at retirement; and (2) 50% probability of a 20% marginal tax rate at retirement