Question

A divorced woman with 2 young children has just re-entered the workforce part time and earns $3,000 from this work. She collects another $2,400 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE?

Answer 1

Answer:

A contribution can be made based only on the income earned from part-time work

Explanation:

Contributions like IRA contributions can only be done on income that the divorced woman earns. The income from her work is $3000. The 2,400 alimony she collects as child support payments is not money from her earned income. So she cannot use this in addition for the purpose of making such a contributions. Therefore, a even with an earned income from work and alimony payments, she can only make the contribution out of the income earned from work.