Tax-deferred individual retirement arrangement

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Reference no: EM131945091

Hal? Thomas, a 25?-year-old college? graduate, wishes to retire at age 60. To supplement other sources of retirement? income, he can deposit 2,200 each year into a? tax-deferred individual retirement arrangement? (IRA). The IRA will earn a return of 12?% over the next 35 years.

a. If Hal makes annual? end-of-year ?$2,200 deposits into the? IRA, how much will he have accumulated by the end of his 60th ?year?

b. If Hal decides to wait until age 35 to begin making annual? $2,200 deposits into the? IRA, how much will he have accumulated by the end of his 60th ?year?

c. Using your findings in parts a and ?b, discuss the impact of delaying making deposits into the IRA for 10 years? (age 25 to age 35?) on the amount accumulated by the end of? Hal's 60th year.

d. Rework parts a and b assuming that Hal makes all deposits at the? beginning, rather than the? end, of each year. Discuss the effect of? beginning-of-year deposits on the future value accumulated by the end of? Hal's 60th year.

Reference no: EM131945091

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