In 2015, Nina contributes 8 percent of her $187,000 annual salary to her 401(k)
ID: 2451048 • Letter: I
Question
In 2015, Nina contributes 8 percent of her $187,000 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 30 years, what is Nina’s after-tax accumulation from her 2015 contributions to her 401(k) account? (Round intermediate calculations to the nearest whole dollar amount. Round "Future value factor" to 4 decimal places.)
Assume Nina’s marginal tax rate at retirement is 30 percent.
b. 20 percent
c. 40 percent
In 2015, Nina contributes 8 percent of her $187,000 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 30 years, what is Nina’s after-tax accumulation from her 2015 contributions to her 401(k) account? (Round intermediate calculations to the nearest whole dollar amount. Round "Future value factor" to 4 decimal places.)
a.Assume Nina’s marginal tax rate at retirement is 30 percent.
b. 20 percent
c. 40 percent
Explanation / Answer
Amount contributed : 187,000 * 8 % $ 14,960
Period of investment in 401(k) 30 yeras
Present value factor @ 7 % for 30 years 12.4090
Future value of contribution (14,960 * 12.409) : 185,639
Tax rate 20 % 30 % 40 %
Tax on future vale 37,128 55,692 74,256
After tax proceeds 148,511 129,947 111,383
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.