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 $59,000.
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

Quizplus · Accepted Answer

Statement I is incorrect as the contribution limit for an IRA is determined by the taxpayer's income level and filing status. For an individual with an adjusted gross income of $63,000, the contribution limit for 2019 is $6,000. However, there are phase-out limits that determine how much of the contribution can be deducted on the tax return.

Statement II is correct, as long as Chi is not covered by a qualified retirement plan through his employer. If he is covered by a retirement plan, the deductibility of the contribution may be limited based on his income level.

Chi Is Single and an Employee of Federal Company