In 2017, Nina contributes 10 percent of her $127,000 annual salary to her 401(k)

Question

In 2017, Nina contributes 10 percent of her $127,000 annual salary to her 401(k) account. She expects to earn a 7 percent before-tax rate of return. Assuming she leaves this (and any employer contributions) in the account until she retires in 20 years, what is Nina's after-tax accumulation from her 2017 contributions to her 401(k) account? (Use Table 1, ITable 2, Table 3, Table 4.) (Round your intermediate calculations and final answers to the nearest whole dollar amount. Round "Future value factor" to 4 decimal places.) b. Assume Nina's marginal tax rate at retirement is 20 percent. Before-tax contribution Future value factor Future value of contribution Taxes payable on distribution After tax proceeds from distribution

Explanation / Answer

*Future value factor = (1+.07)^ 20           [using the formula (1+i)^n]

Before tax contribution 12700      [127000*10%] Future value factor   [at 7%,20] 3.8697 Future value of contribution 12700**3.8697= 49145.19 Tax payable   [49145.19*.20] (9829.038) after tax proceeds from distribution 39316.15   [rounded to 39316]

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.