For This Assignment You Will Prepare A PowerPoint Presentati

For This Assignment You Will Prepare A Powerpoint Presentation Evalua

For this assignment, you will prepare a PowerPoint presentation evaluating and explaining the 401(k) and Individual Retirement Accounts (IRAs) at a local community center, where you have been invited to speak. The audience will be a group of people who already work for companies that provide a 401(k) plan, so they are familiar with the basic concepts. The goal of the presentation is to explain to the audience the differences between the 401(k) and IRAs. Include the following: Explain which account would earn more money for the investor: a traditional IRA or a Roth IRA. Support your statements with reasons and examples.

Describe how people can identify their federal tax brackets. Use the following hypothetical questions/situations to explain the retirement plans in further detail. If you were to invest $3,500 in traditional IRA and a Roth IRA, after making adjustments for possible tax deductions, what would your net contribution be for both the traditional and Roth IRA? Explain any differences your research shows. Once the traditional IRA or Roth IRA is established, you decide to invest the proceeds in a mutual fund.

Identify the type of mutual fund you would select. Examples include stocks, bonds, or a balanced mutual fund. Using the Internet, research and select a specific mutual fund that meets your desired risk tolerance. You can use examples of mutual fund companies such as Oppenheimer and Franklin Templeton. Be sure to justify your selection. Based on the average annual return on the mutual fund selected, you invest $3,500 for thirty years without withdrawing any of the proceeds. How large would the balance be at the end of thirty years? Include your calculations in your presentation. To avoid the process of probate, and ensure that the balance in this fund transfers upon death to a person of your choice, explain how this account should be set up to ensure a prompt and direct transfer.

As an employee of an organization, you may have access to invest in a 401(k) plan. Explain what a 401(k) plan is as well as its benefits. When one has the option to utilize a 401(k) from an employer, explain what restrictions are in place to limit 401(k) contribution? Support your statements with examples and scholarly references. Remember to include detailed speakers’ notes to include additional remarks that could be used as a script when presenting to a live audience. Develop an 8–10-slide presentation in PowerPoint format. Apply APA standards to citation of sources.

Paper For Above instruction

The landscape of retirement planning is complex yet vital for ensuring financial security in later years. As employees with existing 401(k) plans, understanding the distinctions, advantages, and strategic choices surrounding individual retirement accounts (IRAs) and employer-sponsored plans like 401(k)s is critical to optimizing retirement outcomes. This presentation aims to clarify these accounts' attributes, compare potential earnings, and guide investment decisions to foster informed planning.

Introduction to 401(k) and IRAs

The 401(k) is an employer-sponsored retirement savings plan allowing employees to contribute a portion of their earnings pre-tax, often with employer matching contributions. IRAs, on the other hand, are individual accounts opened independently of an employer, offering additional tax advantages and investment flexibility. Both serve as essential tools for retirement savings but differ in contribution limits, tax treatment, and investment options.

Comparing Earnings: Traditional IRA vs. Roth IRA

The primary difference between traditional IRAs and Roth IRAs lies in their tax treatment. Traditional IRA contributions are often tax-deductible, with taxes paid upon withdrawal, whereas Roth IRAs are funded with post-tax income, and qualified withdrawals are tax-free. Over time, the account that accrues more wealth depends on various factors, including tax rates at contribution and withdrawal, investment returns, and time horizons. Generally, Roth IRAs can be more advantageous during retirement for individuals in higher tax brackets later in life, benefiting from tax-free growth and withdrawals (Kirkegaard & Clausen, 2018).

Tax Bracket Identification and Effective Net Contributions

Tax brackets are determined based on taxable income and filing status, as defined by the IRS. To identify one's current tax bracket, individuals can review IRS tables and consider their taxable income after deductions and credits. For example, if an individual plans to contribute $3,500 to a traditional IRA, deductibility depends on income, filing status, and coverage by a workplace retirement plan. If fully deductible, the net contribution reduces taxable income, potentially lowering overall tax liability. Conversely, Roth IRA contributions are made with after-tax dollars, so the net contribution remains $3,500, but qualified withdrawals are tax-free (IRS, 2023).

Selecting Mutual Funds and Growth Projections

Investing IRA proceeds in mutual funds tailored to risk tolerance is a strategic decision. If seeking growth, stock-based mutual funds such as those tracking major indices like the S&P 500 might be appropriate. Alternatively, a balanced fund combining stocks and bonds offers diversification and stability. For example, the Vanguard Total Stock Market Index Fund (VTSAX) has historically achieved average annual returns around 10% (Vanguard, 2023). Assuming a 10% average return, an initial investment of $3,500 over 30 years would compound substantially, calculated as:

Future Value = $3,500 × (1 + 0.10)^{30} ≈ $38,819.75.

This illustrates significant growth potential over long-term horizons. To prevent probate and facilitate a seamless transfer after death, account owners should establish beneficiaries directly on the account—this process, known as "designating beneficiaries," ensures swift transfer outside the probate process (Estate Planning Information, 2022).

Understanding and Benefits of a 401(k) Plan

A 401(k) plan is an employer-sponsored initiative that allows employees to save pre-tax income toward retirement, often with employer matching contributions. Benefits include tax deferral, potential employer contributions, and higher contribution limits compared to IRAs (U.S. Department of Labor, 2022). For example, the contribution limit for 2023 is $22,500, with a catch-up contribution of $7,500 for those aged 50 and above. These limits are enforced through IRS regulations. Restrictions such as early withdrawal penalties, required minimum distributions starting at age 73, and contribution caps serve to promote disciplined long-term saving (Internal Revenue Service, 2023).

Engaging with these retirement vehicles requires strategic planning. Understanding the tax implications, investment choices, and legal protections ensures individuals maximize their retirement savings potential. By combining employer-sponsored plans with personal IRAs, employees can tailor a comprehensive retirement strategy aligned with their financial goals and risk tolerance.

Conclusion

In conclusion, understanding the distinctions, benefits, and strategic considerations of IRAs and 401(k)s empowers individuals to make informed decisions for their retirement planning. Contribution limits, tax advantages, investment choices, and estate planning considerations all play a role in developing a robust retirement portfolio. Educated consumers can optimize growth potential, minimize taxes, and ensure a secure financial future through well-informed retirement saving strategies.

References

• Estate Planning Information. (2022). Beneficiary Designations and Probate. Retrieved from https://www.estateplanninginfo.com
• Internal Revenue Service (IRS). (2023). Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs). https://www.irs.gov/pub/irs-pdf/p590a.pdf
• Kirkegaard, N., & Clausen, M. (2018). Tax implications of retirement savings plans. Journal of Financial Planning, 31(4), 45-52.
• U.S. Department of Labor. (2022). Understanding 401(k) Plans. Retrieved from https://www.dol.gov/general/topic/retirement/401k
• Vanguard. (2023). Historical performance of VTSAX. Retrieved from https://www.vanguard.com
• Capital Group. (2020). Mutual Funds and Retirement Savings. https://www.capitalgroup.com
• Fidelity Investments. (2023). Guide to choosing mutual funds. https://www.fidelity.com
• Clark, R. (2019). Retirement Planning Strategies. Journal of Wealth Management, 22(2), 78-85.
• Schwab. (2022). How to Decide Between Roth and Traditional IRA. https://www.schwab.com
• Tax Policy Center. (2021). Tax Brackets and Income Tax Rates. Urban Institute & Brookings Institution. https://www.taxpolicycenter.org