Carl, age 44, wants to contribute the maximum allowed to a Roth IRA. He is single and his AGI is $124,000. How much can he contribute to the Roth IRA?
A) $5,500
B) $4,033
C) $2,000
D) $1,467 AGI Phase-Out Ranges for 2018 IRAs

Question

Carl, age 44, wants to contribute the maximum allowed to a Roth IRA. He is single and his AGI is $124,000. How much can he contribute to the Roth IRA?
A) $5,500 
B) $4,033 
C) $2,000 
D) $1,467 AGI Phase-Out Ranges for 2018 IRAs

Quizplus · Accepted Answer

The maximum contribution to a Roth IRA for individuals under the age of 50 is $5,500 in 2018. However, there are income limits for Roth IRA contributions. For a single individual, the phase-out range for 2018 begins at an AGI of $120,000 and ends at $135,000. Since Carl's AGI is $124,000, his contribution limit is reduced by (124,000-120,000)/15,000, which equals 0.267. Therefore, his contribution limit would be $5,500 x (1-0.267) = $4,033.

Carl, Age 44, Wants to Contribute the Maximum Allowed to a Roth