Investing in a Traditional IRA You have $3,000 of after-tax income that you invest in a traditional IRA. Recall that contributions to traditional IRAs are tax deductible, i.e., you are investing pretax dollars. The investment earns a 10% return, and you will withdraw the money as a lump sum in 30 years while in retirement (after age 59.5). Your current marginal tax rate is 30%, and your marginal tax rate in retirement will be 20%. How much will be your after-tax withdrawal?

Answer rating: 100% (QA)

First I will calculate the amount of pretax income that you ... View the full answer