Question

Carri and Dane, ages 34 and 32, respectively, have been married for 11 years, and both are active participants in employer qualified retirement plans. Their total AGI in 2019 is $196,000, and they earn salaries of $87,000 and $95,000, respectively.
Compute the following amounts. If an amount is zero, enter "0". Do not round intermediate computations.
Amount
a. The amount each can contribute to a regular IRA. $
b. The amount each can deduct for regular IRA contributions. $
c. The amount each can contribute to a Roth IRA. $
d. The amount each can deduct for Roth IRA contributions. $

Answer 1

Answer:

a. $6,000

b. $0

c. $4,200

d. $0

Explanation:

a. Carri and Dane can each contribute $6000 to their traditional IRA as they both are below 50.

b.  Nobody from Carri and Dane can deduct the contribution to a traditional IRA as their AGI is greater than phase-out ceiling of $123000 in 2019.

c.  Carri and Dane can each contribute $4,200 to their Roth IRA

Calculation

Excess AGI = AGI - beginning threshold

Excess AGI = $196,000 - $193,000

Excess AGI = 3000

Phaseout = 3000/(203000-193000)

Phaseout = 30%*6000

Phaseout = $1,800

Contribution ceiling = $6,000 - $1,800

Contribution ceiling = $4,200

d. For a contribution to a Roth IRA, there is no deduction available.