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 $61,000.
II.If Alex is an active participant in the company's pension plan,and has adjusted gross income of $66,000,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 $61,000 - $71,000.

A)Only statement I is correct
B)Only statement II is correct
C)Both statements are correct.
D)Neither statement is correct.

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 $61,000.
II.If Alex is an active participant in the company's pension plan,and has adjusted gross income of $66,000,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 $61,000 - $71,000.
​
A)Only statement I is correct
B)Only statement II is correct
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Statement I is incorrect as the limit for making a deductible contribution to an IRA is phased out for individuals whose income is within certain ranges and who are an active participant in an employer-sponsored retirement plan. For a single individual in 2021, the phase-out range is $66,000 to $76,000. 
Statement II is correct as per the IRS rules for the phase-out limit mentioned above. In this case, Alex can contribute $5,500 to his IRA account, but the deductible contribution limit is reduced to $2,750.

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