In 2013, Nitai contributes 10 percent of his $125,000 annual salary to a Roth 40
ID: 2707187 • Letter: I
Question
In 2013, Nitai contributes 10 percent of his $125,000 annual salary to a Roth 401(k) account sponsored by his employer, AY Inc. AY Inc. matches employee contributions dollar for dollar up to 10 percent of the employees salary to the employees traditional 401(k) account. Nitai expects to earn a 5 percent before-tax rate of return.
Assuming he leaves his contributions in the Roth 401(k) and traditional 401(k) accounts until he retires in 20 years, what are Nitais after-tax proceeds from the Roth 401(k) and traditional 401(k) accounts after he receives the distributions assuming his marginal tax rate at retirement is 30 percent? (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
In 2013, Nitai contributes 10 percent of his $125,000 annual salary to a Roth 401(k) account sponsored by his employer, AY Inc. AY Inc. matches employee contributions dollar for dollar up to 10 percent of the employees salary to the employees traditional 401(k) account. Nitai expects to earn a 5 percent before-tax rate of return.
account sponsored by his employer, AY Inc. AY Inc. matches employee contributions dollar for dollar up to 10 percent of the employeea^s salary to the employees traditional 401 account. Nitai expects to earn a 5 percent before-tax rate of return.Explanation / Answer
Because distributions from a Roth 401(k) are not taxable, Nitai
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