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 each of the following alternative situations? (Leave no answer blank. Enter zero if applicable.) Problem 13-69 Part a a. Michael's AGI is $60,500 after he contributed $4.300 to a Contribution to Roth IRA

Answer 1

Answer

A.

Michael has contributed $4,300 to a traditional IRA. Because his AGI was below thephase-out threshold, he was able to deduct all $4,300 of that contribution.

Because a taxpayer’s contributions to traditional and Roth IRAs may not exceed $5,500 (taxpayers under 50 years of age) and because his AGI is below the Roth IRA phase-out threshold,

he may contribute $1,200 to the Roth ($5,500 total minus $4,300 contribution to traditional IRA)

Hence Michael contribute to a Roth IRA is $1200.

B.

Michael’s AGI is too high to contribute to a deductible IRA. So, Michael has the option of contributing to nondeductible traditional IRA and/or a Roth IRA.

In total, he can contribute $5,500. So, he can contribute $5,500 to a Roth IRA. Because the Roth IRA is superiorto a nondeductible traditional IRA, Michael should contribute to the Roth not the nondeductible IRA.

Hence Michael contribute to a Roth IRA is $5500.

C.

Michael’s AGI is too high to contribute to a Roth IRA. It is also too high to contribute to a deductible IRA.

In this case, Michael’s only option for contributing to an IRA is that he can contribute $5,500 to a nondeductible IRA.

Hence Michael contribute to a Roth IRA is nil.