Leon, age 45, is an active participant in his employer’s defined benefit retirement plan, but he would also like to make a deductible contribution to a traditional IRA this year. Leon is married, files a joint return with his wife, and has an AGI of $112,000 in 2019. What is the maximum deductible contribution that Leon can make to a traditional IRA?
Answer :- $ 3300
The range for taxpayers who are active participants and use the married filing jointly filing status is $103,000 - $123,000 for 2019.
As Leon’s AGI is within this range, he may not make a full $6000 deductible contribution to a traditional IRA, but may make a reduced deductible contribution, as calculated by the following formula:
Reduction = [ Contribution Limit x (AGI - Lower Limit) ] / Difference in range
Therefore, Leon’s deductible contribution is reduced by $2700 [$6000 x [ ( $112000 - $103000) / $20,000 ]
The maximum deductible contribution that Leon can make to a traditional IRA is $3300 ($6000 - $2700).
Get Answers For Free
Most questions answered within 1 hours.