Finance
Randy Cross, a new financial planning client, makes a tax-deductible contribution of $4,000 to a traditional IRA. The client is in the 24 percent marginal tax bracket. How much are the approximate tax savings?
Homework Answers
Brooklyn has been contributing to a traditional IRA for seven years (all deductible contributions) and has...
Brooklyn has been contributing to a traditional IRA for seven years (all deductible contributions) and has a total of $30,000 in the account. In 2019, she is 39 years old and has decided that she wants to get a new car. She withdraws $20,000 from the IRA to help pay for the car. She is currently in the 24 percent marginal tax bracket. What amount of the withdrawal, after tax considerations, will Brooklyn have available to purchase the car? After...
An individual is considering contributing $4,500 per year to either a traditional or a Roth IRA....
An individual is considering contributing $4,500 per year to either a traditional or a Roth IRA. Payments would begin in one year. If she uses the traditional IRA, her contributions would be fully deductible. She is 41-years old and is in a 29 percent tax bracket. On either IRA she can earn 8 percent. When she retires at age 65, she believes she will be in a 18 percent tax bracket. Which type of IRA should she choose if she...
Mrs. Lohan, age 64, plans to retire this December. She estimates that the balance in her...
Mrs. Lohan, age 64, plans to retire this December. She estimates that the balance in her IRA will be $86,500, which she plans to withdraw to finance the purchase of a condominium. Assuming that her marginal tax rate is 24 percent, compute her after-tax cash from the IRA liquidation assuming that: a. The IRA is a Roth IRA that she opened in 1999. b. The IRA is a traditional IRA to which she made only deductible contributions c. The IRA...
George (age 42 at year-end) has been contributing to a traditional IRA for years (all deductible...
George (age 42 at year-end) has been contributing to a traditional IRA for years (all deductible contributions) and his IRA is now worth $28,600. He is planning on transferring (or rolling over) the entire balance into a Roth IRA account. George’s marginal tax rate is 24 percent. (Leave no answer blank. Enter zero if applicable. Round your intermediate calculations and final answers to the nearest whole dollar amount.) a. What are the tax consequences to George if he takes $28,600...
One of the simplest tax avoidance strategies is to contribute to a Roth IRA, although this...
One of the simplest tax avoidance strategies is to contribute to a Roth IRA, although this may not be right for everyone. Some individuals, particularly low-income households that may be eligible for tax credits because of young children in the home, may benefit more from contributions to a traditional IRA. Here, you want to help Jennifer identify the best retirement savings option for her situation. Jennifer is 25, single, and makes $38,000 a year. Jennifer does not have access to...
Tax Savings. Lloyd and his wife, Jean, have no retirement plan at work, but they contribute...
Tax Savings. Lloyd and his wife, Jean, have no retirement plan at work, but they contribute $3,500 each year to a traditional IRA. They are in a 28% marginal tax bracket. What tax savings will they realize for these contributions annually? The tax savings they will realize annually for these contributions is $_. (Round to the nearest dollar.)
Tax Savings. Lloyd and his wife, Jean, have no retirement plan at work, but they contribute...
Tax Savings. Lloyd and his wife, Jean, have no retirement plan at work, but they contribute $3,500 each year to a traditional IRA. They are in a 28% marginal tax bracket. What tax savings will they realize for these contributions annually? The tax savings they will realize annually for these contributions is $_. (Round to the nearest dollar.)
Yuki (age 45 at year-end) has been contributing to a traditional IRA for years (all deductible...
Yuki (age 45 at year-end) has been contributing to a traditional IRA for years (all deductible contributions), and her IRA is now worth $39,000. She is trying to decide whether she should roll over her traditional IRA into a Roth IRA. Her current marginal tax rate is 24 percent. She plans to withdraw the entire balance of the account in 20 years and she expects to earn a before-tax rate of return of 4.9 percent on her retirement accounts and...
In 2019, Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from...
In 2019, Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from his traditional IRA account. The balance of his IRA account is $280,000 (before reducing it for withdrawals/distributions described below). Over the years, Rashaun has contributed $77,180 to the IRA. Of his $77,180 contributions, $57,680 was nondeductible and $19,500 was deductible. Assume Rashaun did not make any contributions to the account during 2019. (Do not round intermediate calculations. Round your final answers to the nearest...
Yuki (age 45 at year-end) has been contributing to a traditional IRA for years (all deductible...
Yuki (age 45 at year-end) has been contributing to a traditional IRA for years (all deductible contributions), and her IRA is now worth $46,000. She is trying to decide whether she should roll over her traditional IRA into a Roth IRA. Her current marginal tax rate is 25 percent. She plans to withdraw the entire balance of the account in 20 years and she expects to earn a before-tax rate of return of 5.6 percent on her retirement accounts and...
Mrs. Lohan, age 64, plans to retire this December. She estimates that the balance in her IRA will be $86,500, which she plans to withdraw to finance the purchase of a condominium. Assuming that her marginal tax rate is 24 percent, compute her after-tax cash from the IRA liquidation assuming that: a. The IRA is a Roth IRA that she opened in 1999. b. The IRA is a traditional IRA to which she made only deductible contributions c. The IRA...
One of the simplest tax avoidance strategies is to contribute to a Roth IRA, although this may not be right for everyone. Some individuals, particularly low-income households that may be eligible for tax credits because of young children in the home, may benefit more from contributions to a traditional IRA. Here, you want to help Jennifer identify the best retirement savings option for her situation. Jennifer is 25, single, and makes $38,000 a year. Jennifer does not have access to...
In 2019, Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from his traditional IRA account. The balance of his IRA account is $280,000 (before reducing it for withdrawals/distributions described below). Over the years, Rashaun has contributed $77,180 to the IRA. Of his $77,180 contributions, $57,680 was nondeductible and $19,500 was deductible. Assume Rashaun did not make any contributions to the account during 2019. (Do not round intermediate calculations. Round your final answers to the nearest...
Yuki (age 45 at year-end) has been contributing to a traditional IRA for years (all deductible contributions), and her IRA is now worth $46,000. She is trying to decide whether she should roll over her traditional IRA into a Roth IRA. Her current marginal tax rate is 25 percent. She plans to withdraw the entire balance of the account in 20 years and she expects to earn a before-tax rate of return of 5.6 percent on her retirement accounts and...
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