Question
In: Finance
Jack, age 72, and Sydney, age 60, have been married for 20 years. Jack is unemployed...
Jack, age 72, and Sydney, age 60, have been married for 20 years. Jack is unemployed and Sydney earns $20,000. How much can Jack and Sydney contribute to each of their traditional IRA in 2020 respectively?
Jack can contribute $
Sydney can contribute $
How will your answers change if Jack is 60 and Sydney is 48 years old now?
Jack can contribute $
Sydney can contribute $
Solutions
Expert Solution
Individuals without income from jobs generally aren't qualified to add to tax-advantaged retirement accounts, such as IRAs, because they don't have "acceptable" compensation on which to base such contributions. However, there is an exemption for married, nonworking individuals whose spouses are employed.
If the conditions are met, the employed spouse can make an IRA contribution on behalf of a nonworking spouse using the income of the employed spouse to meet the income requirement.
For 2019 and 2020, the individual contribution limit is the lesser of the following two:
- $6,000 a year for individuals under age 50 as of the end of the year and $7,000 for anyone 50 or older
- 100% of eligible compensation
One may contribute those amounts to each of his and spouse’s IRAs, for up to a maximum of $12,000, plus the $1,000 catch-up contribution for whichever spouse is eligible (age 50 or over).
Case 1
Jack can contribute $0
Sydney can contribute $14,000 ($7,000 for her and $7,000 for Jack)
Case 2
Jack can contribute $0
Sydney can contribute $10,000 ($5,000 for her and $5,000 for Jack)
jeff jeffy answered 1 year agoRelated Solutions
Mrs. J. (age 42) has been married for 20 years to a TV newscaster. She has...
Mrs. J. (age 42) has been married for 20 years to a TV
newscaster. She has two 16-year-old twins who are in high school.
She's coming in for a routine physical because she said over the
phone that she has no energy and has lost some weight. She also
thinks she has had a temperature for several days.
CC: "I can't stand sweating at night and think I'm too young for
menopause. Besides, I still get my period."
Physical exam:...
Janet and Paul have been married for 17 years. They have 3 children, Susan, age 16,...
Janet and Paul have been married for 17 years. They have 3
children, Susan, age 16, Jonathan, age 14, and Lillian, age 6.
Janet abuses alcohol and as a result has been neglectful of the
children’s care and emotional needs. Paul is in the military and
spends a lot of time away and is thus unaware of Janet’s problem
and how it is affecting the children. When Paul is around, he is
quite strict with the children, which confuses them...
Demarco and Janine Jackson have been married for 20 years and have four children who qualify...
Demarco and Janine Jackson have been married for 20 years and
have four children who qualify as their dependents (Damarcus,
Janine Jr., Michael, and Candice). The couple received salary
income of $100,000 and qualified business income of $10,000 from an
investment in a partnership, and they sold their home this year.
They initially purchased the home three years ago for $200,000 and
they sold it for $250,000. The gain on the sale qualified for the
exclusion from the sale of...
Demarco and Janine Jackson have been married for 20 years and have four children who qualify...
Demarco and Janine Jackson have been married for 20 years and
have four children who qualify as their dependents (Damarcus,
Janine Jr., Michael, and Candice). The couple received salary
income of $125,000 and qualified business income of $12,500 from an
investment in a partnership, and they sold their home this year.
They initially purchased the home three years ago for $212,500 and
they sold it for $262,500. The gain on the sale qualified for the
exclusion from the sale of...
Demarco and Janine Jackson have been married for 20 years and have four children who qualify...
Demarco and Janine Jackson have been married for 20 years and
have four children who qualify as their dependents (Damarcus,
Janine, Michael, and Candice). The couple received salary income of
$150,000 and qualified business income of $22,500 from an
investment in a partnership, and they sold their home this year.
They initially purchased the home three years ago for $262,500 and
they sold it for $312,500. The gain on the sale qualified for the
exclusion from the sale of a...
Demarco and Janine Jackson have been married for 20 years and have four children who qualify...
Demarco and Janine Jackson have been married for 20 years and
have four children who qualify as their dependents (Damarcus,
Janine, Michael, and Candice). The couple received salary income of
$100,000 and qualified business income of $10,000 from an
investment in a partnership, and they sold their home this year.
They initially purchased the home three years ago for $200,000 and
they sold it for $250,000. The gain on the sale qualified for the
exclusion from the sale of a...
Demarco and Janine Jackson have been married for 20 years and have four children who qualify...
Demarco and Janine Jackson have been married for 20 years and
have four children who qualify as their dependents (Damarcus,
Janine Jr., Michael, and Candice). The couple received salary
income of $125,000 and qualified business income of $12,500 from an
investment in a partnership, and they sold their home this year.
They initially purchased the home three years ago for $212,500 and
they sold it for $262,500. The gain on the sale qualified for the
exclusion from the sale of...
Demarco and Janine Jackson have been married for 20 years and have four children who qualify...
Demarco and Janine Jackson have been married for 20 years and
have four children who qualify as their dependents (Damarcus,
Janine Jr., Michael, and Candice). The couple received salary
income of $125,000 and qualified business income of $12,500 from an
investment in a partnership, and they sold their home this year.
They initially purchased the home three years ago for $212,500 and
they sold it for $262,500. The gain on the sale qualified for the
exclusion from the sale of...
Demarco and Janine Jackson have been married for 20 years and have four children who qualify...
Demarco and Janine Jackson have been married for 20 years and
have four children who qualify as their dependents (Damarcus,
Janine, Michael, and Candice). The couple received salary income of
$100,000, and they sold their home this year. They initially
purchased the home three years ago for $200,000 and they sold it
for $250,000. The gain on the sale qualified for the exclusion from
the sale of a principal residence. The Jacksons incurred $16,500 of
itemized deductions, and they had...
Demarco and Janine Jackson have been married for 20 years and have four children who qualify...
Demarco and Janine Jackson have been married for 20 years and
have four children who qualify as their dependents (Damarcus,
Janine, Michael, and Candice). The couple received salary income of
$100,000, and they sold their home this year. They initially
purchased the home three years ago for $200,000 and they sold it
for $250,000. The gain on the sale qualified for the exclusion from
the sale of a principal residence. The Jacksons incurred $16,500 of
itemized deductions, and they had...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Department G had 2,040 units 25% completed at the beginning of the period, 12,800 units were...
- Create a program that parses a CSV file of product data and prints the items with...
- What’s the output of following code fragment: #include<stdio.h> #include<signal.h> void response (int sig_no) { printf("25"); }...
- Pistol Pete's Platinum Palace has outstanding 5 year corporate bonds with a current yield of 6.50%....
- Sara’s Ice Cream Shop is closed for six months out of the year but has had...
- On January 1, 20X7, Pepper Company acquired 90 percent of the outstanding common stock of Salt...
- The management estimates total sales for the period January, 2019 through June, 2019 based on actual...
ADVERTISEMENT