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Vickie is single and age 43. She reported AGI of $124,000 in tax year 2017. She...

Vickie is single and age 43. She reported AGI of $124,000 in tax year 2017. She is an active participant in her employer’s pension plan. What is the maximum Roth IRA contribution she can make in 2017?

a. $0

b. $3,300

c. $2,200

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Answer #1

generally, the maximum Roth IRA contribution for persons below the age of 50 is $5,500 for tax year 2017.

in case of a single person filing, the contribution starts to reduce below $5,500 is your AGI exceeds $118,000

also, the contribution is prohibited if the AGI exceeds $133,000

the reduction of contribution is $0.55 for every $1.50 earned in excess of $118,000

in the given case, the contribution shall be reduced by ($124,000 - $118,000) / $1.50 * $0.55 = $2,200

hence, the  maximum Roth IRA contribution she can make in 2017 shall be $5,500 - $2,200 = $3,300

hence, the correct answer is b. $3,300

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