Compare Pedro after-tax spending power

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Question - Pedro has an IRA with a balance of $200,000. He has cash of $68,000. Pedro's tax bracket is 34%. Pedro will reach retirement in 20 years. His projected rate of return on his IRA (or if converted his Roth IRA) is 11%. Pedro's cash account grows at a rate of 1.5% per year. Compare Pedro's after-tax spending power at age 60 if he converts his IRA to a Roth IRA versus if he leaves the traditional IRA alone.

Reference no: EM132990060

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