John (age 57 and single) has earned income of $4,200. He has $32,900 of unearned

Question

John (age 57 and single) has earned income of $4,200. He has $32,900 of unearned (capital gain) income. (Omit the "$" sign in your response.) a. If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2012? Deductible IRA contribution $ b. If he does participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2012? Deductible IRA contribution $ c. If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2012 if he has earned income of $14,600? Deductible IRA contribution $

Explanation / Answer

Hi,

Part A:

John can claim a deduction of $ 4200 if If he does not participate in an employer-sponsored plan.

Part B:

John can claim a deduction of the lower of 6000 or earned income. Hence, he is entitled to get a deduction of $ 4200 only, even if he participated in an employer-sponsored plan.

Part C:

John can claim a deduction of the lower of 6000 or earned income. In this case John will be entitled to claim $ 6000 as the value of deduction.

Thanks.

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