Question

Brandon wants to retire in 42 years. He makes annual contributions to a Traditional IRA in the amount of $2,200. He is taxed at 33% today, but anticipates that will change to 15% in his retirement. If the average annual rate of return on the account is 4.9%, what is the effective value of Brandon's IRA account when he retires?

Answer 1

FVAO=2200[(1+0.049)^(42)-1)/0.049]
FVAO=289911.03

289,911.03−(289,911.03×0.15)
=246,424.38