Tax-Free Individual Retirement (Ira) Or Keogh Plan - HP 12c Platinum Reference Manual

124 Personal Finance
Tax-Free Individual Retirement (IRA) or
Keogh Plan
The advent of tax-free retirement accounts (IRA or Keogh) has resulted in considerable
benefits for many persons who are not able to participate in group profit sharing or
retirement plans. The savings due to the tax-free status are often considerable, but
complex to calculate. Required data are: the years to retirement, the total annual
investment, the compound annual interest rate of the investment, and an assumed tax rate
(the dividend tax rate) which would be paid on a similar but taxable investment. This
program calculates:
1. The future cash value of the tax-free investment (the dividend tax rate does not apply).
2. The total cash paid in.
3. The total dividends paid (the tax-free status means these dividends are tax-free).
4. The future value of the investment at retirement, assuming that after retirement you
make withdrawals at a rate which causes the money to be taxed at the withdrawal tax
rate. This rate is often assumed to be one half of the dividend tax rate.
5. The diminished purchasing power assuming a given annual inflation rate.
6. The future value of a comparable taxable investment (the dividend tax rate applies).
7. The diminished purchasing power of a comparable taxable investment.
Notes:
•
The calculations run from the beginning of the first year to the end of the last
year.
•
The interest (annual yield), i, should be entered to as many significant figures as
possible for maximum accuracy.
12c platinum / 12C
RPN KEYSTROKES
fs
fCLEARÎ
:n
:P
§
t
+
t
:M
:2
b
-
t
1
DISPLAY
000,
11 :n
001, 45
14 §
002, 45
20 :P
003,
31 +
004,
40 t
005,
31 ~
006,
15 ³
007, 45
2 t
008, 45
25 :M
009,
30 -
010,
31 :2
011,
1 b
012,
12c platinum
ALG KEYSTROKES
fs
fCLEARÎ
DISPLAY
000,
001, 45 11
002, 20
003, 45 14
004, 40
005, 31
006, 34
007, 36
008, 31
009, 45 15
010, 30
011, 45 2
012, 25