An employee contributes $16,700 to a 401(k) plan each year, and the company matches 10 percent...

An employee contributes $16,700 to a 401(k) plan each year, and the company matches 10 percent of this annually, or $1,670. The employee can allocate the contributions among equities (earning 14 percent annually), bonds (earning 6 percent annually), and money market securities (earning 4 percent annually). The employee expects to work at the company 20 years. The employee can contribute annually along one of the three following patterns:

	Option 1			Option 2			Option 3
Equities		70	%		60	%		50	%
Bonds		30			35			40
Money market securities		0			5			10
		100	%		100	%		100	%

Calculate the terminal value of the 401(k) plan for each of the 3 options, assuming all returns and contributions remain constant over the 20 years. (Do not round intermediate calculations. Round your answers to the nearest whole number. (e.g., 32))

Expert Solution

jeff jeffy answered 7 months ago

Steven is contributing to his 401(k) retirement plan. He contributes $3100 per year. His employer matches...

Steven is contributing to his 401(k) retirement plan. He contributes $3100 per year. His employer matches 50% of his contribution. If Steven can earn a 6% rate of return, how much (approximately) will he have in his account after 6 years?(Round your answer). $18433. $32435. $30806. $28572.

9) Eriko earns $45,755 per year. She contributes 8% of her income to her 401(k) plan...

9) Eriko earns $45,755 per year. She contributes 8% of her income to her 401(k) plan at work. In her tax bracket, she would pay 37% of her income in state and federal income taxes. A) How much is she saving this year on her taxes by making these 401(k) plan contributions? B) Suppose that instead of contributing to her 401(k) plan, she decides instead to deposit the same amount of money to a Roth IRA. What would her tax...

Your employer provides a 401(k) retirement plan and matches 100% of your contributions up to 4%....

Your employer provides a 401(k) retirement plan and matches 100% of your contributions up to 4%. Your annual income is $90,000 and you expect to earn an annualized 7.0% return on your investment. What is the value of your 401(k) after 30 years if you contribute 4% of your annual income? What is the value if the return on investment is at a 5.0% annualized rate? How much of a difference would the 7.0% return scenario be if you stopped...

A 50 year old employee contributes 20000 per year to her 401k, and her employer matches...

A 50 year old employee contributes 20000 per year to her 401k, and her employer matches her contributions by 40%. The investment company has provided her with two options: Option 1 Option 2 Equity 60% 40% Bond 30% 40% Money Market Fund 10% 20% The employee wants to retire at 65. The average rates of return presented are 5% on equity, 3% on bonds, and 1% on money market funds. Calculate the total amount of money at the time of...

In 2018, Nina contributes 11 percent of her $119,000 annual salary to her 401(k) account. She...

In 2018, Nina contributes 11 percent of her $119,000 annual salary to her 401(k) account. She expects to earn a 5 percent before-tax rate of return. Assuming she leaves this (and any employer contributions) in the account until she retires in 25 years, what is Nina’s after-tax accumulation from her 2018 contributions to her 401(k) account? a.) Assume Nina’s marginal tax rate at retirement is 30 percent. b.) Assume Nina’s marginal tax rate at retirement is 20 percent. c.) Assume...

In 2019, Nina contributes 12 percent of her $125,000 annual salary to her 401(k) account. She...

In 2019, Nina contributes 12 percent of her $125,000 annual salary to her 401(k) account. She expects to earn a 5 percent before-tax rate of return. Assuming she leaves this (and any employer contributions) in the account until she retires in 20 years, what is Nina’s after-tax accumulation from her 2019 contributions to her 401(k) account? (Use Table 1, Table 2.) (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Problem 13-55 Part a a. Assume...

Your company sponsors a 401(k) plan into which you deposit 12 percent of your $65,000 annual...

Your company sponsors a 401(k) plan into which you deposit 12 percent of your $65,000 annual income. Your company matches 50 percent of the first 5 percent of your earnings. You expect the fund to yield 8 percent next year. Assume you are currently in the 31 percent tax bracket. a. What is the total annual investment in the 401(k) plan at year-end? (Round your answer to the nearest whole number. (e.g., 32)) b. What is your one-year return

1. n 2017, Nina contributes 11 percent of her $126,000 annual salary to her 401(k) account....

1. n 2017, Nina contributes 11 percent of her $126,000 annual salary to her 401(k) account. She expects to earn a 10 percent before-tax rate of return. Assuming she leaves this (and any employer contributions) in the account until she retires in 25 years, what is Nina’s after-tax accumulation from her 2017 contributions to her 401(k) account? (Use Table 1, Table 2, Table 3, Table 4.) (Round your intermediate calculations and final answers to the nearest whole dollar amount. Round...

Daniel is a new employee looking at contributing to a 401(k) offered through the company. How...

Daniel is a new employee looking at contributing to a 401(k) offered through the company. How will his contributions affect his tax liability? Lower federal income tax No change to tax liability No change to FICA tax liability Increase tax liability

1. A 401(K) plan is a good substitute for a life insurance policy.

Just answer True or False?1. A 401(K) plan is a good substitute for a life insurance policy.2. A cost of living rider that you purchase as part of your insurance life insurance policy gives you the option to buy additional insurance coverage to compensate for inflation.3. All variable life insurance policies guarantee a minimum death benefit.4. An insurance premium is a fee paid to an insurance company in exchange for risk protection.5. I have a $300,000 mortgage. I am paying...

Question