Answer:
They both produced the same cash amount
Explanation:
The regular retirement would have its deducted after withdrawal from the plan while Roth retirement plan's tax would have been deducted prior to investing funds in the plan
The future value of the $2000 is computed thus:
FV=PV*(1+r)^n
PV is the amount saved in the plan which is $2000
r is the growth rate of the funds in the plan which is 12%
n is the number of years the amount would be left in the plan
FV=$2000*(1+12%)^20=$ 19,292.59
After tax amount=$ 19,292.59*(1-28%)=$ 13,890.66
The future value of the $1,440 is computed thus:
FV=$1,440*(1+12%)^20=$ 13,890.66
The Roth plan has not tax implication thereafter as tax was paid before savings.
