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October 19, 2017
QUESTION : No Comments

Jack is single, age 65 has made a contribution of $8200 to the traditional IRA account in 2014

Jack is single, age 65 has made a contribution of $8200 to the traditional IRA account in 2014. How much will be the excise tax in 2014 if Jack withdraws $2200 from the IRA account by the due date?

A. $132

B.$192

C. $30

D. $0

Expert Answer


Answer

  1. A 6% excise tax applies to excess IRA contributions that are not corrected by the applicable deadline.
  1. A 10% excise tax applies to distributions from an IRA, qualified plan or 403(b) account that occur before the participant reaches age 59.5. . . .
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David, age 45 and Kim, age 42 are married and file income tax jointly. Both of them are active particpants

David, age 45 and Kim, age 42 are married and file income tax jointly. Both of them are active particpants in their employer’s retirement account. Their combined AGI for 2015 is $107,000 and they both make maximum contributions to their traditional IRA accounts. How much will be tax savings due to such contributions if they are in marginal tax rate of 25%?

A. $1462.50

B. $1300

C. $1237.50

D. $1512.50

Expert Answer


As per the IRA Contribution Limit chart for 2015, the total contribution to IRA cannot exceed $ 5,500 . . .

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Discuss how and why banks suffered financial difficulties during the financial crisis.

Discuss how and why banks suffered financial difficulties during the financial crisis.

Expert Answer


The financial crisis happened because banks were able to create too much money, too quickly, and used it to push up house prices and speculate on financial markets. . . . 

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We buy a 10%, 20 year bond we expect to sell in 4 years at which time we prognosticate

We buy a 10%, 20 year bond we expect to sell in 4 years at which time we prognosticate that the required rates will be 8% per annum. If the yield to maturity is 6% presently, what will the price the bond will be selling for now?

Expert Answer


Solution-

N = 20, r = 6% , FV = $1,000

pmt = $1,000*10% = 100

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Jenny age, 55 wants to convert $18,000 balance in her traditional IRA account into Roth IRA

Jenny age, 55 wants to convert $18,000 balance in her traditional IRA account into Roth IRA after paying necessary taxes. In addition, she plans to deposit $5000 (post tax) into Roth IRA. Jenny wants to withdraw funds from Roth IRA after 3 years to pay for her son’s college tution. How much can she withdraw from Roth IRA after 3 years (when she is 58)? Assume expected return of 9% and marginal tax rate of 28%.

A. $21,318

B. $21,775

C. $22,240

D. $23,259

Expert Answer


SOLUTION.

Net converted amount = 18,000 x 28% =$5,040

$18,000 -$5,040 = $12,960 . ……..

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A person at retirement is expected to receive a fully taxable Lump-Sum distribution of $245,000.

A person at retirement is expected to receive a fully taxable Lump-Sum distribution of $245,000. What will be the effective tax rate on this distribution based on 10 year Forwarding Average rate? Use 1986 Income Tax Rate Table for Ten Year Averaging Calculation.

A. 20.96%

B. 20.86%

C. 20.11%

D. 20.50%

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Peter is about to retire from a company in which he worked for 24 years. Peter participated in Defined Benefit Plan

Peter is about to retire from a company in which he worked for 24 years. Peter participated in Defined Benefit Plan which uses Unit Credit Formula (2.4% of average of 3 highest salaries multiplied by number of years of services). The three highest salaries for Peter are: $121,000, $124,000 and $127,000. Calculate the current value of Peter’s pension at 7% return if remaining life expectancy is 25 years.

A. $834,084

B. $832,346

C. $842,130

D. $847,042

Expert Answer


Solution-

Option B is correct

832346

Average of three highest monthly salaries

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Last month George joined a company at an annual salary of $85,000.

Last month George joined a company at an annual salary of $85,000. This company contributed 6.8% of his salary in a qualified retirement plan. The retirement plan has purchased a Term Life Insurance policy on George’s life. What is the maximum aggregate premium the retirement plan can pay to insurance company against this policy based on 25% test?

A. $120.42

B. $1445

C. $127.50

D. $109.79

Expert Answer


Annual salary = 85000

Contribution = 6.8% of salary

Annual contribution towards retirement account = Salary x contribution% . . . .

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ssume that the dollar is expected to steadily depreciate at a rate of 6% over the next year.

We have the following current spot ex-rates: A. $1.0842 / € B. ¥123.2253 / $ C. $1.5028 / £ D. BRL 3.6720 / $ (Brazilian real) a. Assume that the dollar is expected to steadily depreciate at a rate of 6% over the next year. Calculate and report the 3-month, 6-month and 12-month forward rates (F3, F6, F12) based on the expected change of 6% over the year using the original spot rate for each calculation. Quote all 4 ex-rates as they are quoted above, and do not reverse any of the quotes. Show forward rates for each currency separately in the exact order above. b. Assume that the dollar is expected to steadily appreciate at a rate of 9% over the next year. Calculate and report the 3-month, 6-month and 12-month forward rates (F3, F6, F12) based on the expected 9% change over the year using the original spot rate for each calcualtion. Quote all 4 ex-rates as they are quoted above and do not reverse any of the quotes. Show each currency separately in the exact order above. Please explain clearly..

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Jenny age, 55 wants to convert $18,000 balance in her traditional IRA account into Roth IRA after

Jenny age, 55 wants to convert $18,000 balance in her traditional IRA account into Roth IRA after paying necessary taxes. In addition, she plans to deposit $5000 (post tax) into Roth IRA. How much can Jenny withdraw from Roth IRA after 5 years (when she is 60)? Assume expected return of 10% and marginal tax rate of 28%.

A.$28,925

B $26,389

C. $28,500

D. $27,634

Expert Answer


On Roth IRA, income is taxable. Therefore, return generated on ROTH IRA would be taxed.

After tax return = before tax return x (1- tax rate) . ……

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