Asked by Aaron Morris on May 17, 2024
Verified
What is the maximum deductible contribution that can be made to one or more deductible IRAs in each of the following instances?
a.A single person,age 41,who is not an active participant in an employer-sponsored retirement plan with AGI of $97,000.
b.A married couple,ages 33 and 34,neither of whom is an active participant in an employer-sponsored retirement plan.One spouse has W-2 income of $57,000 and the other spouse did not work.
c.A married couple,ages 44 and 48.One spouse is covered under an employer-sponsored retirement plan and the other is not.The covered spouse has W-2 income of $125,000 and the non-covered spouse has W-2 income of $32,000.
AGI
The total income earned by an individual, subtracting specific deductions, used to calculate how much income tax is owed.
Deductible Contribution
An investment into a qualified account, such as an IRA or 401(k), that can be subtracted from gross income to reduce taxable income.
- Determine the peak permissible contributions towards retirement funds, considering the individual's earnings and active participation status.
- Evaluate the effect of Adjusted Gross Income on the limitations and eligibility for retirement plan contributions.
Verified Answer
JB
Johndavid BartonMay 19, 2024
Final Answer :
a.$5,500.
b.$11,000.
c.$5,500 (for the non-covered spouse);$0 for covered spouse because joint income is greater than $119,000 upper phaseout-limit for married filing jointly.Note that the non-covered spouse deduction would start to phase out if joint income exceeds $186,000 and is fully phased-out at joint income over $196,000.
b.$11,000.
c.$5,500 (for the non-covered spouse);$0 for covered spouse because joint income is greater than $119,000 upper phaseout-limit for married filing jointly.Note that the non-covered spouse deduction would start to phase out if joint income exceeds $186,000 and is fully phased-out at joint income over $196,000.
Learning Objectives
- Determine the peak permissible contributions towards retirement funds, considering the individual's earnings and active participation status.
- Evaluate the effect of Adjusted Gross Income on the limitations and eligibility for retirement plan contributions.