Chi is single and an employee of Federal Company. Chi's adjusted gross income for the current year is $63,000. Chi would like to make the maximum contribution to his individual retirement account this year. Which of the following statements about Chi's contribution and deduction amounts is are) true? I. He is not allowed to make an IRA contribution because his adjusted gross income is greater than $60,000. II. If Federal Company does not have a qualified pension plan; Chi can contribute and deduct a maximum of $5,500 to his IRA account.

Question

Quizplus · Accepted Answer

Chi can contribute to an IRA regardless of his income level, but the deduction may be limited if he is covered by a retirement plan at work. Since Federal Company does not have a qualified pension plan, Chi can contribute and deduct the maximum amount allowed for the year, which is $5,500 (assuming this is the limit for the year in question). Statement I is incorrect because there is no income limit for making a contribution, only for deducting it.

Chi Is Single and an Employee of Federal Company