Alex is 37 years old,single and employee of Ellis Company.
I.If Alex is an active participant in the company's pension plan,he is allowed to make a contribution to his IRA account only if his adjusted gross income is less than $62,000.
II.If Alex is an active participant in the company's pension plan,and has adjusted gross income of $67,000,he is allowed to contribute $5,500 to his IRA account,but he is only allowed a deduction of $2,750 for the contribution because his adjusted gross income is between $62,000 - $72,000.

Question

Alex is 37 years old,single and employee of Ellis Company.
I.If Alex is an active participant in the company's pension plan,he is allowed to make a contribution to his IRA account only if his adjusted gross income is less than $62,000.
II.If Alex is an active participant in the company's pension plan,and has adjusted gross income of $67,000,he is allowed to contribute $5,500 to his IRA account,but he is only allowed a deduction of $2,750 for the contribution because his adjusted gross income is between $62,000 - $72,000.
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Quizplus · Accepted Answer

Statement I is incorrect as the limit for making a deductible contribution to an IRA, while being an active participant in an employer-sponsored retirement plan, is gradually phased out for taxpayers depending on their adjusted gross income. For 2021, taxpayers with adjusted gross income higher than $76,000 as a single filer, or $125,000 as a married filing jointly, are not allowed to make a deductible contribution to their IRA account. 
However, Statement II is correct as per the IRS rules for 2021. If Alex’s AGI is $67,000 and he is an active participant in the company's pension plan, he is allowed to contribute $5,500 to his IRA account. However, the contribution is only partially deductible up to $2,750 because his modified AGI falls within the phase-out range of $62,000 to $72,000 as a single filer.

Alex Is 37 Years Old,single and Employee of Ellis Company