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Chapter 9 - Question 4 : Help me to explain this question. Thank you Dave, single...

Chapter 9 - Question 4 :

Help me to explain this question. Thank you

Dave, single and age 53, is a participant of his employer’s qualified profit sharing plan. For the current year he received a forfeiture allocation of $250, but the employer did not make any other contribution for the year. Dave would like to make an IRA contribution. If Dave’s AGI is $79,000 (all comprised of W-2 earnings and portfolio income), what is the maximum IRA contribution Dave can make for 2018?

A.            $0

B.            $3,000

C.            $5,500

D.            $6,500

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Answer #1

Maximum IRA contribution that dave can make for year 2018 is $6,500

Since he is above 50 in the year in which he is making IRA contribution

He ia permitted to make IRA contribution amounting to Rs. $6,500 i.e (5,500+1,000)

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