Mr. and Mrs. Lawry, both age 60, each make the maximum contribution to their traditional IRAs. Mr. Lawry is an active participant in a section 401(k) plan, but Mrs. Lawry is not an active participant in any other qualified plan. If their joint AGI before any IRA deduction is $144,900, compute their AGI.

Question

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Since Mr. Lawry is an active participant in a section 401(k) plan, his contribution to the traditional IRA is not deductible. However, Mrs. Lawry's contribution is fully deductible as she is not an active participant in any other qualified plan. Therefore, the couple can deduct only Mrs. Lawry's contribution to their traditional IRA from their joint AGI.

The maximum contribution for each person for the tax year 2020 is $6,000. Thus, the total contribution for the couple is $12,000. As Mrs. Lawry's contribution is fully deductible and Mr. Lawry's contribution is not, only $6,000 can be deducted from their joint AGI of $144,900.

Therefore, their AGI is $144,900 - $6,000 = $138,900.

Hence, the correct answer is option C.

Mr and Mrs