Question

Required information Problem 13-69 (LO 13-4) The following information applies to the questions displayed below.) Michael is single and 35 years old. He is a participant in his employer's sponsored retirement plan. How much can Michael contribute to a Roth IRA in 2019 in each of the following alternative situations? (Leave no answer blank. Enter zero if applicable.) Problem 13-69 Part a a. Michael's AGI before the IRA contribution deduction is $57,000. Michael contributed $3,600 to a traditional IRA. Contribution to Roth IRA

Answer 1

a. Contribution to Roth IRA = $2400

In Year 2019, the maximum amount of contribution towards traditional IRA and Roth IRA cannot exceed $6000, provided the AGI is within the threshold limits. In the given case, Michael's AGI is within the threshold limits, hence he can contribute maximum amount of $6000.

Contribution in traditional IRA = $3600

Thus contribution to Roth IRA = $6000 - $3600 = $2400

b. Contribution to Roth IRA = $6000

In Year 2019, the maximum amount of contribution towards traditional IRA and Roth IRA cannot exceed $6000, provided the AGI is within the threshold limits. In the given case, Michael's AGI is within the threshold limits, hence he can contribute maximum amount of $6000. Hence he can contribute entire amount of $6000 towards Roth IRA.

c. Contribution to Roth IRA = $4020

In Year 2019, the maximum amount of contribution towards traditional IRA and Roth IRA cannot exceed $6000, provided the AGI is within the threshold limits. In the given case, Michael's AGI is not within the threshold limits hence it has to be calculated in the manner given below :-

2019 AGI	$1,27,000
Less: Minimum base slab	$1,22,000
Difference	$5,000
Divide the difference by $15,000 ($137,000 - $122,000)	0.33
Maximum Contribution limit	$6000
Deduction (6000 * 0.33)	$1,980
Reduced Contribution ( $ 6000 - $1980 )	$4,020