Question

Which of the following is correct regarding IRA contributions?

a. IRA contributions made above the annual limit are subject to a 10% excise tax.

b. A 51 year old non-working person, who divorced in 2016 and receives alimony, may

contribute to an IRA the lesser of $7,000 or 100% of the alimony received.

c. An employee who makes voluntary contributions to a retirement plan is not considered

an active participant.

d. The earliest age that a catch-up contribution can be made to an IRA is 59-1/2.

Answer 1

Ans : b. A 51 year old non-working person, who divorced in 2016 and receives alimony, may
contribute to an IRA the lesser of $7,000 or 100% of the alimony received

Alimony is considered as income for IRA contribution

option A is wrong because IRA made above annual limits attracts excise duty of 6%
option C is wrong because whether contribution is made voluntary or mandatory to IRA, the contributor is considered as active participant only
option D is wrong becasue earliest age that a catch-up contribution can be made is 50 years or more