Marshall and Michelle are married with salaries of $80,000 and $64,000,respectively.Their combined AGI is $186,000.Michelle is an active participant in her company's qualified pension plan while Marshall is not.Determine the maximum combined IRA contribution and deduction amounts?

Maximum Maximum
Contribution Deduction

Question

Marshall and Michelle are married with salaries of $80,000 and $64,000,respectively.Their combined AGI is $186,000.Michelle is an active participant in her company's qualified pension plan while Marshall is not.Determine the maximum combined IRA contribution and deduction amounts?
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Maximum Maximum
Contribution Deduction

Quizplus · Accepted Answer

Since Michelle is an active participant in her company's qualified pension plan, her IRA contribution is not fully deductible. Marshall, on the other hand, is not an active participant, so his contribution is fully deductible.

The maximum contribution amount for each person is $6,000 (for individuals under 50), so their combined maximum contribution is $12,000. However, Michelle's contribution is limited to the non-deductible amount of $6,000 since her AGI exceeds the income limits for a full deduction.

Therefore, the maximum combined deductible contribution amount is $5,500 for Michelle (the maximum deductible contribution limit for those whose income is between $103,000 and $123,000), and $5,500 for Marshall since he is not an active participant.

Thus, the maximum combined IRA contribution and deduction amounts are $11,000. Therefore, the correct choice is B.

Marshall and Michelle Are Married with Salaries of $80,000 and $64,000,respectively.Their