When deciding whether to invest in a Traditional IRA or a Roth IRA one would con

Question

When deciding whether to invest in a Traditional IRA or a Roth IRA one would consider all except the amount of income you expect to make at retirement whether you are covered by an employer-sponsored retirement plan and. if so, how much income you earn if you want to start drawing out the money at 70-1/7 or not whether you want the money to accumulate tax-free or not How much could an individual earning $187,000 per year accumulate in a Keogh plan if they invested the maximum allowed for 20 years at a return of 9 percent? Round to the nearest dollar it needed $2,148,678 $2.392.151 $840,000 $935,000 What would be the difference in the tax consequences of an $18.000 withdrawal from a Roth IRA versus a Traditional IRA if $15 000 represents long-term capital gains? $2,000 short-term capital gains and $1,000 is interest? Assume a tax rate of 30% and a capital gains tax rate of 10 percent $5.200 more in taxes with a Traditional IRA $4,800 more in taxes with a Traditional IRA $5,400 more in taxes with a Traditional IRA $5,400 more in taxes with a Roth IRA

Explanation / Answer

Ans) $840,000 Interest Amount = P(1+r)^T = 187000*(1+0.09)^20 $       (187,000) = $        1,048,025 $       (187,000) = $            861,025 Earning are = $            861,025

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