Question

Meredith, who is single, would like to contribute $6,000 to her Roth IRA. What is the maximum amount that Meredith can contribute if her AGI is $123,000?

Note: please provide your answer and explanations on Word or Excel as handwritten responses are difficult to read. Thank you.

Answer 1

Answer
Per year 2019 rules, Answer will be different for other years
The tax status of Meredith is Single. Her AGI is $ 123000 which falls under the slab of $ 122,000 to $ 136,999 under the table for Roth IRA and contribution limit for 2019.
The maximum contribution is $ 6000 but for this slab it is proportionately reduced.
Her AGI exceeds $ 122,000 by $ 1000.
The value between range = 136,999-122,000 = $15,000 (rounded off for calculation)
The reduction in contribution shall be = $ 1000/15000 of $ 6000
Maximum Contribution limit for under Age 50	$            6,000
Less : Phaseout (123000-122000)/(15000)*6000	$               400
	$            5,600
Hence, maximum contribution Meredith can make would be $ 5,600