John (age 60 and single) has earned income of $3,600. He has $35,800 of unearned

Question

John (age 60 and single) has earned income of $3,600. He has $35,800 of unearned (capital gain) income.

a. If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2017?

b. If he does participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2017?

c. If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2017 if he has earned income of $18,400?

Explanation / Answer

John (age 60 and single) has earned income of $3,600. He has $35,800 of unearned (capital gain) income

Deductible IRA contribution = lesser of eared income of $6000

= lower of $3600 or $6000

= $3600

Deductible IRA contribution = lesser of eared income of $6000

= lower of $3600 or $6000

= $3600

Deductible IRA contribution = lesser of eared income of $6000

= lower of $18400 or $6000

= $6000

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