Final answer:
Roland's partial withdrawal from his deferred annuity is fully taxable, and additional penalties may apply. In the case of Alexx and Spenser, Alexx, who invested directly, will have more after 30 years due to the lack of administrative fees and the benefit of a slightly higher compound interest rate.
Step-by-step explanation:
When Roland decides to take a partial withdrawal of $15,000 from his deferred annuity at age 50, the tax implications would likely be that the amount is fully taxable. Since the money in the annuity has grown tax-deferred, withdrawals are typically taxed at ordinary income rates. There may also be penalties for early withdrawal if it is taken before the age of 59 and a half, depending on the terms of the annuity.
With regard to Alexx and Spenser's investments, Alexx's direct investment earns a higher rate of return due to the absence of administrative fees. Compound interest plays a critical role in the growth of these investments over time. After 30 years, Alexx's investment grows at 5% annually without any fees, while Spenser's retirement fund grows at a net rate of 4.75% after fees. To calculate the difference between their final amounts, we use the formula for compound growth: Final Amount = Principal * (1 + rate/100)^years.
For Alexx: $5,000 * (1 + 0.05)^30
For Spenser: $5,000 * (1 + 0.0475)^30
The difference can be found by subtracting Spenser's final amount from Alexx's.