Yon made contributions to a Traditional IRA over the course of 30 working years. Her contributions averaged $5,000 annually. Yon was in the 27% tax bracket during her working years. The average annual rate of return on the account was 3%. Upon retirement, Yon stopped working and making IRA contributions. Instead, she started living on withdrawals from the retirement account. At this point, Yon dropped into the 15% tax bracket. Factoring in taxes, what is the effective value of Yon’s Traditional IRA at retirement? Assume annual compounding. $209,331.83
$173,650.27
$343,862.19
$202,195.52

Question

Yon made contributions to a Traditional IRA over the course of 30 working years. Her contributions averaged $5,000 annually. Yon was in the 27% tax bracket during her working years. The average annual rate of return on the account was 3%. Upon retirement, Yon stopped working and making IRA contributions. Instead, she started living on withdrawals from the retirement account. At this point, Yon dropped into the 15% tax bracket. Factoring in taxes, what is the effective value of Yon’s Traditional IRA at retirement? Assume annual compounding. $209,331.83
 $173,650.27
 $343,862.19
 $202,195.52

anonymous · Answer

@jim_thompson5910

anonymous · Answer

@kropot72

anonymous · Answer

@ganeshie8

anonymous · Answer

@jim_thompson5910

jim_thompson5910 · Answer

are you familiar with this formula?

$$\large FV =  C\bullet \dfrac{(1+i)^{nt}-1}{i}$$

anonymous · Answer

@ganeshie8 can you please help me with this problem?

anonymous · Answer

I used the equation above and solved for the first part and got 237877.08

anonymous · Answer

@ganeshie8

anonymous · Answer

i then solved further on and got the last response. can you please check if that is correct?

jim_thompson5910 · Answer

27% of that is paid in taxes

so you have 100% - 27% = 73% left over

73% of 237877.08 equals what number?