Question

For the following scenarios, compute the maximum total deductible contribution to a traditional IRA for 2018....

For the following scenarios, compute the maximum total deductible contribution to a traditional IRA for 2018.

Traditional IRA
Contribution
a. Juan, age 41, earns a salary of $28,000 and is not an active participant in any other qualified plan. His wife, Agnes, has no earned income. Juan wishes to contribute as much as possible to his own IRA. $
b. Abby, age 29, has earned income of $25,000, and her husband, Sam, has earned income of $2,600. They are not active participants in any other qualified plan. $
c. Leo's employer makes a contribution of $3,500 to Leo's simplified employee pension plan. Leo is single, has earned income of $32,000, and has AGI of $29,000. $

Homework Answers

Answer #1
(a) Spousal IRA provisions allows homemakers a $5000 deduction to a traditional IRA.
In the instant case , $5000 may be contributed to the employee traditional IRA
and $ 5000 may be contributed to a spousal traditional IRA totalling to $ 10,000
(b) The given data shows combined earned income exceeding $10,000. thus $5000 may be contributed to spousal traditional IRA and $5000 may be contributed to an employee traditional IRA
© A deduction for an amount that is equal to the smaller of $5000 or 100% of his compensation
for the year is allowable because the shown data reflects that the adjusted gross income is
greater than $58000
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