Question

10. Reverend Smith and his wife Jane file a joint return. Reverend Smith is 51 years old and Jane is 49. Reverend Smith receives $65,000 in salary and is covered by a retirement plan at work, while Jane does not have a job. Their modified AGI is $65,000. What maximum deductible amount may each of them contribute to a traditional IRA? a) Reverend Smith cannot contribute since he is covered by a retirement plan at work. Jane can contribute up to $5,500. b) They can contribute up to $5,500 each. c) Reverend Smith can contribute up to $6,500, while Jane can contribute up to $5,500. d) Reverend Smith can contribute up to $6,500, while Jane cannot make a deductible contribution since she has no earned income.

Answer 1

Option D

Option A is not right because you can contribute to separate traditional IRA even if you participate in employer sponsored retirement fund

Option B is wrong because the contribution limit for Revered Smith is $6,500 (50 years or older) and Jane cannot contribute as she has no earned income

Option C is wrong because Jane cannot contribute as she has no earned income, which is must for traditional IRA contribution

So Option D is correct option

Note :

The limits now increased from 5,500 to 6,000 for below 50 years and 6,500 to 7,500 for 50 or older people

Under Roth IRA, an employee can make additional contribution for unemployed spouse