What is the maximum deductible contribution that Erick (age 32 and single) can m

Question

What is the maximum deductible contribution that Erick (age 32 and single) can make in 2017 to an Individual Retirement Account(s) if he earns $62,000 and is not covered by an employer-sponsored retirement plan?

a. $5,500 to a traditional IRA

b. $4,500 to a traditional IRA due to the income limitation

c. $6,500 ($5,500 plus an extra $1,000 catch-up contribution) to a traditional IRA and zero to a Roth IRA

d. $5,500 to a traditional IRA but only $1,500 additional to a Roth IRA

a. $5,500 to a traditional IRA

b. $4,500 to a traditional IRA due to the income limitation

c. $6,500 ($5,500 plus an extra $1,000 catch-up contribution) to a traditional IRA and zero to a Roth IRA

d. $5,500 to a traditional IRA but only $1,500 additional to a Roth IRA

Explanation / Answer

SOLUTION

The correct option is $5,500 to a traditional IRA.

The maximum total annual contribution for IRA is $5,500.

There is an additional $1,000 catch up contribution allowance if age is 50 and above.

In the given case, since the age of eric is 32 years, maximum deductible contribution is $5,500.

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