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4 (a). You contribute $5,500 to your traditional IRA every year for 20 and earn 8...

4 (a). You contribute $5,500 to your traditional IRA every year for 20 and earn 8 percent annually. If you are in the 24 percent income tax bracket, what will be your annual tax obligation when you withdraw the funds for the next 15 years if your funds continue to earn 8 percent? 4 (b). A widower currently has $107,500 yielding 8 percent annually. Can he withdraw $18,234 a year for the next 10 years? If he cannot, what return must he earn in order to withdraw $18,234 annually?

Solutions

Expert Solution

a

Particulars Amount
Contribution              5,500.00
× FVAF             45.76196
Future value          251,690.80
× PMT factor               0.11683
Annual withdrawal            29,404.92
Tax on it              7,057.18

b

Particulars Amount
Balance          107,500.00
× PMT factor               0.14903
Annual withdrawal            16,020.67

Cannot withdraw 18234

Rate required is: 10.97% to withdraw 19234

jeff jeffy answered 1 year ago
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