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Chapter 9 - Question 6 : Help me to explain this question about contribution and what...

Chapter 9 - Question 6 :

Help me to explain this question about contribution and what is the maximum deductible IRA contribution? Thank you

Sal, single and age 72, is a participant of his employer’s qualified profit sharing plan. For the current year he received a profit-sharing contribution of $1,200. Sal would like to make a deductible IRA contribution. If Sal’s AGI is $49,000 (all comprised $15,000 of W-2 earnings, and the rest as Social Security and portfolio income), what is the maximum deductible IRA contribution Sal can make for 2018?

A.            $0

B.            $3,000

C.            $5,500

D.            $6,500

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Answer #1

IRA is an Individual retirement account. Individual can make contribution to this account, to have money after retirement. This contributed money will be eligible for deduction from tax payable.

An individual whose age is more than 50 or more can claim deduction of $6,500.

Therefore, correct option is Option D.

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