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 $61,000.
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

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 $61,000.
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.
​

Quizplus · Accepted Answer

Statement I is incorrect. Chi is allowed to make an IRA contribution even if his adjusted gross income is greater than $61,000. However, his contribution may not be tax-deductible if he earns above certain limits.

Statement II is correct. If Federal Company does not have a qualified pension plan, Chi may be able to deduct the full contribution of $5,500 to his IRA account, as long as he meets other eligibility criteria. However, if Federal Company does have a qualified pension plan, the deductibility of his contribution may be limited based on his adjusted gross income.

Chi Is Single and an Employee of Federal Company