WITH MICHAEL D: EVANS, CPA, CFP
Individual Retirement Account
Mary and Joe are both age 90. They each earn 925,000
par -year. Both plan to invest $2,000 per year for the
next 20 years. Mary and Joe prefer conservative
investments. They expect to earn 10 percent per year.
Interestingly enough, twenty years from now Mary has
accumulated $46,37® more than Joe.
Is Mary that much smarter than Joe? She may be. In
this case, however, the tremendous difference in the
value of thctr accomUs lies fat the fact that Mary
contributed $2,000 annually to an IRA. Joe chose to
invest his $2,000 outside an IRA.
- - _
Valae of AccoaaU
ia the year ZM4
Mary I114.SM
Joe M.1T4
MM*
-1 ' r^_—1 '1 ■
Kvmu
Because Joe did not contribute to an IRA, he did not
receive the $3,000 deduction on Us inconfe tMreturn.
Since Joe is in the Si parent bracket, nepald $400 '
more in taxes than Mary did. Thus, Joe really only had
$1,540 to invest ($8,000 - 400). Second, even thoi«h they
each earned a 10 percent rate of return, Joe had to pay
taxes on fate earnings each year. Joe actuaBy earned a
7.7 percent after-tax rate at return. Earning, on
monies contributed to an IRA are not taxed until
withdrawn. Therefore, Mary did not have to pay tax—
on her earnings each year.
Is an IRA for,everyone? The answer i&£&|ow
ever, each individual should take a careful look at his
financial situation to determine if an'IRA contri
ssjtjpyai'js ***
Keogh) are the major tax
By contributing to an IRA, you will reootup;
-One dollar of tax far each dollar
„ n_a—rf,,,a i j
comnouiea
-Tax-deferred compounding of earnings
—Deferral of taxation until later yean when you
will likely be in a lower tax bracket
• -Increased savings for retirement
Monies contributed to an IRA cannot be withdrawn
without penalty before age »Vi. This, perhaps, is the
biggest disadvantage of contributing to an IRA. ■
IRA monies csn be invested in stocks, mutual
funds and even real estate. You are not Hmited to bairit
certificates at deposit and !—«■>«« contracts.
IRA’s are a powerful vehicle for reducing uw »wi
review your tax situation and current‘caslf
Make an fcrtxIHgBrsrt dedsloul
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S*5G^ESW58»yR3i' >',4GS65&Ki _________ ___
Scholarships and cash
—awards valued at $26,000
await young musicians in
North CaroUna who com
pete in the IBM NCNB
Music Competition.
In its fourth year, the
NCNB Music Competition
- has expanded its prizes to
allow mere young North.
quality music education.
First prize in this com
petition sponsored by
NCNB National Bank is a
$12,000 scholarship to the
North Carolina School of
the - Arts in Winston
■-—- -——
aaiem. The winner
receives $3,000 annually for
Up to four years of study at
the School of the Arts.
The second place con
testant receives a four
year scholarship to the
. School of the Arts valued at
$8,000 ($3,000 annually),'
while the third prize is a
$4,000 ($1,000 per year),
Competition begins with
regional auditions in Fay
etteville, Marion, Wilson
and' Winston-Salem on
February 16. One contes
tant in each region will
----
receive a $500 cash award.
These cash awards are to
be need at the winners’
discretion for the advance
ment of their music
careers.
The regional auditions
determine the finalists to
be invited to the final com
petition to be held in
NCNB Performance Place
— in. Charlotte’s Spirit
Square on March 12. That
com petition will determine
the scholarship winners.
The competition is open
to residents of North
Carolina who have not
--
reached the age of 20 and
who are not enrolled in a
music program at an in
stitution of_higber learn
«ng- .. :
Competition includes
strings, woodwinds, brass,
percussion, harp, piano,
classical guitar and voice.
Applications are avail
able through music teach
ers or by writing Ms
Shelby -Graham, NCNB
Corp. T24-1, Charlotte,
N.C. 28259.
The Music Competition is
part of NCNB’s continuing
•ypport of the arts.
s
I
I
;
m
REQUEST LINE f ^ 1
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