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22 May 2018

Conduct a web search for the topic 'saving for your retirement'. Similar to budgeting, you should find a variety of websites with information concerning how to save for retirement. Please provide three strategies to develop YOUR plan for retirement. Cite your sources.

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Patrina Schowalter
Patrina SchowalterLv2
23 May 2018

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Please complete the problems below, and submit your answers tothe Week 7 Dropbox. See the Syllabus section “Due Dates forAssignments & Exams” for due date information. Please useproper spelling and grammar in your response.

Please choose one of the following (1, 2, or 3), and respond tothe questions.

For employees available to participate in a pensionplan

Does your employer offer a retirement plan at work? If so,answer the following.

What type of plan is it? Defined benefit or definedcontribution?*

If defined contribution, what type?

401(k)

403(b)

Employee stock ownership plan

Profit-sharing plan

Does your employer “match” your contribution? If so, what is thematch?

What are the benefits to you (the employee) of participating inthis plan?

Are there limits to how much you can contribute to the plan?

Does it have a Roth feature?

What are the benefits to your employer for offering thisplan?

If you are not contributing, why?

* If you do not know the answer to these questions, then askyour HR or payroll department for the answers. Please do notguess.

For employees without a pension plan atwork

If your employer does not offer a retirement plan at work, thenemployees have some options for accumulating retirement savings ontheir own.

Discuss the nonemployer plan retirement saving opportunitiesavailable to an employee.

Are you currently contributing to a nonemployer plan?

If yes, what type?

What is the benefit to you as an employee for saving for yourretirement?

Are there limits to how much you can contribute to the plan?

If you are not contributing, why?

For the self-employed

Are you self-employed? If yes, address the following.

What retirement savings opportunities are available to theself-employed?

Are there limits to how much you can contribute to the plan?

Do you currently contribute to a self-employed plan?

If so, what kind?

What are the tax benefits to a self-employed person for makingcontributions?

If you are not contributing, why?

For the nonworking taxpayer

If you do not have a job and you are not self-employed, thenchoose one of the following.

Please address questions 1, 2, or 3 above based on an interviewyou have conducted with your spouse, and describe a spousalIRA.

If you are unmarried, please address questions 1, 2, or 3 abovebased on an interview with one of your parents.

If neither of the above options is possible for you, pleaseinterview a friend, and address questions 1, 2, or 3 above.

Jessica is 49 years of age. She has been saving for retirement for many years and has fairly large balance in her IRA. Amanda, Jessica’s daughter who is in her senior year of high school, has been notified that she has been accepted to Rice University. Jessica had expected Amanda to go to a state university and was not prepared for the tuition costs associated with Rice. After some thought, she has decided that the only thing she can do is to take approximately $ 20,000 per year from her retirement plan.

Question: What are the tax consequences to Jessica for the withdrawals from her IRA?

To answer this question, use the Internal Revenue Code. You may refer to a textbook but you may not base the answer on the textbook – you must reference the IRC section. What keywords did you use in your search to derive this answer?

SHOW ALL STEPS. NEED TO DOUBLE CHECK WORK

Complete the following two retirement scenarios as instructed.(Hint: draw a time line and see what you know for each time periodand for which time period you know enough to calculate the presentvalue or the future value of the cash flows.)

1) Tom is planning for a very early retirement. Tom would liketo retire at age 40 and have enough money saved to be able to draw$250,000 per year for the next 40 years. Based on family history,he thinks it is likely that he will live to age 80. He plans tosave by making 15 equal annual installments (from age 25 to age 40)into a fairly risky investment fund that he expects will earn 12%per year. He will leave the money in this fund until it iscompleted depleted when he is 80 years old. To make his planwork

a. How much money must Tom accumulate byretirement?

b. How much money will Tom draw out during hisretirement?

c. How much must Tom pay into the investment each year for thefirst 15 years?

d. Compare the out-of-pocket savings to the investment value atthe end of the 15 years to the withdrawals made during Tom’sretirement. Comment below on how these numbers could beso different, if they are. Use full sentences,please.

2) Tom’s sister, Janet, is also planning for retirement;however, she started saving for her retirement earlier than Tomsince she expects that she will need more money for retirementbased on the fact that women in their family usually live longerthan men. She also is planning for a very early retirement. Janetwould like to retire at age 40 and have enough money saved to beable to draw $250,000 per year for the next 50 years. Based onfamily history, she thinks it is likely that she will live to age90. She plans to save by making 20 equal annual installments (fromage 20 to age 40) into a fairly risky investment fund that sheexpects will earn 12% per year. She will leave the money in thisfund until it is completed depleted when she is 90 years old. Tomake her plan work

a. How much money must Janet accumulate byretirement?

b. How much money will Janet draw out during herretirement?

c. How much must Janet pay into the investment each year for thefirst 20 years?

d. Compare the out-of-pocket savings to the investment value atthe end of the 20 years to the withdrawals made during Janet’sretirement. Comment below on how these numbers could beso different, if they are. Use full sentences,please.

Comment also on how different Janet’s numbers are fromTom’s, if they are. Again, please use full sentences. Makesure to clearly give all reasons thatthey are different if they are.

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