Assuming the employee actual annual investment

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-You deposit 5% of your $40,000 annual income in a 401(K) plan at the end of each year. Your employer matches 2% of your earnings. You expect the plan to earn 10% and you are in the 25% tax bracket.

A. What is your annual investment?

B. What is your one year return on the plan?

-Assuming the employee actual annual investment is $3,000/year (including the employer’s contribution) , his tax rate stays at 25%, and the 401(k) yield remains at 10% over a 20-year career, when the employee retires the 401(k) will be worth:

-Now assume you just retired, and have accumulated $170,000 in the 401K. If you continue to earn 10% and want to withdraw $20,000 at the beginning of each year, how many years can you do this?

Reference no: EM13814571

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