Traditional ira savings plan

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Reference no: EM132044604

Robert and Robin joined ABC Co. on the same day. Robert signed up for a Traditional IRA savings plan; Robin decided upon the Roth IRA. If they each put $5,000 into their plans per year for 35 years without withdrawing anything until the end, how much will each have after taxes are paid, assuming a 7% interest rate compounded annually and a 30% income tax rate. Remember that both IRAs accumulate tax free; but when monies are withdrawn, the traditional IRA is taxed in its entirety while the Roth IRA isn’t taxed at all (ignore the nominal upfront tax benefits of the Traditional IRA).

Reference no: EM132044604

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