Janet, age 29, is unmarried and is an active participant in a qualified retireme

Question

Janet, age 29, is unmarried and is an active participant in a qualified retirement plan. Her modified AGI is $63,000 in 2016. Click here to access Exhibit 19.3, Do not round intermediate computations. a. Janet can contribute s1,100 x to her traditional IRA, but she can deduct s4,400 Feedback Check My Work Employees not covered by another qualified plan can establish their own tax deductible Individual Retirement Accounts (IRAs) However, the amount of the contribution and the extent to which it is deductible may be limited b. Assume instead that Janet is a participant in a SIMPLE IRA and that she elects to contribute 4% of her compensation to the account, While her employer contributes 3%. Janet will contribute will vest immediately is 4,270 X to her SIMPLE IRA account. Her employer will contribute 12,000 X .The amount that 4,270 X .

Explanation / Answer

ans)

1) 63000 - 61000 = 2000 ( Amount AGI exceeds beginning phase out range)

2000 / 10,000 X 5500 = 1100 Nondeductable amount

5500 - 1100 = 4400 Deductible amount

Janet can only deduct 4400 due to phase out provision.

She can contribute 5500 to her IRA

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