Question: Why do a pension account and the savings portion of
Why do a pension account and the savings portion of a life insurance product provide the same after tax rates of return if tax rates are constant over time? In comparing these two savings vehicles, is it appropriate to have the same number of dollars invested in both alternatives?
Answer to relevant QuestionsIf tax rates are constant over time, why might a taxpayer prefer to save through a money market account rather than a pension account or a tax exempt insurance policy? Assume the same facts presented in exercise 9 with the exception that the taxpayer elects to pay the taxes on the conversion from the IRA funds. Should the taxpayer convert to a Roth IRA? Assume the same facts presented in exercise 5 with the exception that the taxpayer expects his tax rate to be 20% when he retires in 40 years. What should the taxpayer do now? In analyzing the conversion decision in Equations 3.8 and 3.9, we assumed that any taxes due would be paid from non-converted funds that would otherwise be invested in an SPDA. How would these equations and thus the relevant ...What are the major variables that affect the magnitude of the required after corporate tax— but before shareholder level after corporate tax—but before shareholder level tax— after corporate tax—but before ...
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