Question

Will fan & medal.
Yon made contributions to a Traditional IRA over the course of 25 working years. Her contributions averaged $3,000 annually. Yon was in the 26% tax bracket during her working years. The average annual rate of return on the account was 4%. 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.

Answer 1

A. $106,197.06
B. $92,453.91
C. $169,947.06
D. $111,194.57

Answer 2

Geez - I have a lot of the formulas about IRA accumulation and payout on my website.
But all this tax jazz - geez!!!!

Answer 3

That's what is confusing me, xD.

Answer 4

25 years 3,000 annual 4% interest
According to the calculator here:
http://www.1728.org/annuity.htm
That yields $129,935.23 at retirement

Answer 5

That's not an answer choice though. D:

The tax stuff probably has to be counted in somehow.

Answer 6

Okay 26% of 129,935.23 = 33,783.16

subtracting 33,783.16 from 129,935.23
yields 96,152.07
not one of the choices either.

Answer 7

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.

It doesn't say how much she withdrawed...

Answer 8

This is ridiculous. You probably know how difficult it is just getting a total for an annuity
GEEZ
Here's a calculator for an annuity payout:
http://www.1728.org/annupay.htm

Answer 9

I think someone else needs my help

Answer 10

Okay, thanks for helping. When I get done with it, I'll let you know what the answer was. :)

Answer 11

The answer was A. $106,197.06

Answer 12

Geez - think I'm gonna take a break now