Roland is earning $100,000 per year as an IT professional at ABC ManufacturingInc. At the beginning of
Question:
Roland is earning $100,000 per year as an IT professional at ABC ManufacturingInc. At the beginning of each year, Roland contributes 4% of his salary to thecompany's defined contribution plan. The company matches 50% of employee'scontributions. At present, Roland has a total of $250,000 in the plan. He isthinking about retiring in the next 10 years. When he retires, he intends totransfer the accumulated value of his pension to an insurance company andpurchase an annuity. His friend, Alex who works at the insurance company toldhim that the best annuity for him given his circumstances would pay $95 per$1,000 of capital. With this is mind, he is curious to know what would be hisannual pension income from the insurance company assuming that his salaryremains the same and his investments are growing at the rate of 6.5% per year.What would you tell him?
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III