The Robertsons, a couple with an adjusted gross income of $28,500, decides to contribute the maximum amount possible toward their individual retirement accounts (IRAs)even though Mr. Robertson is covered by a pension plan where he works. He names his wife the beneficiary of the IRA. What is such a tax strategy called?

Question

Quizplus · Accepted Answer

Contributing the maximum amount possible to an IRA, especially when one spouse is covered by a pension plan, is a tax deferral strategy. This allows the couple to defer taxes on the amount contributed until the funds are withdrawn, typically during retirement when they may be in a lower tax bracket.

The Robertsons, a Couple with an Adjusted Gross Income of $28,500