Tia is a 52-year-old, unmarried taxpayer who is an active participant in an employer-sponsored qualified retirement...

Tia is a 52-year-old, unmarried taxpayer who is an active participant in an employer-sponsored qualified retirement plan. Before IRA contributions, her AGI is $67,000 in 2018.

What is the maximum amount she can contribute and the maximum deduction she can receive for a contribution to a traditional IRA?
What is the maximum amount she can contribute and the maximum deduction she can receive for a contribution to a Roth IRA?

Expert Solution

1. Traditional IRA contributions are not limited by how much you make annually. The maximum total contribution for IRA is $ 6500 for 2018 if you are above 50 years of age.

So Tia can contribute $ 6500 to traditional IRA.

If you do not have employer sponsored retirement plan, your traditional IRA contribution is fully deductible.

But Tia is active participant in an employer sponsored qualified retirement plan. Also hr filing stauts will be single, above 50 years and her AGI is $ 67,000, maximum deduction for her will be $ 3,900.

2. Eligibility to contribute to Roth IRA is based on income. If you file taxes as a single person and your AGI should be below $ 135,000 for 2018 to contribute to Roth IRA.

For a single person and with AGI below $ 120,000 and age above 50 can contribute $ 6500 in a year.

As Tia is fulfilling all the above conditions, she can contribute $ 6500 to Roth IRA.

Contributions to Roth IRA are not tax deductible.

ekkarill92 answered 1 year ago

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