Mike is 60 years old, married (tax filing married jointly) and him and his wife have combined taxable compensation of $150,000 per year and neither have employer sponsored retirement plans. Mike's total taxable compensation in 2020 is $40,000. He made a Roth IRA contribution in the amount of $6,000 on April 1, 2020 for tax year 2020. How much can he contribute on a tax deferred basis to a Traditional IRA in tax year 2020? g

Question

Leon Alvarez

Business

8 January, 16:58

Mike is 60 years old, married (tax filing married jointly) and him and his wife have combined taxable compensation of $150,000 per year and neither have employer sponsored retirement plans. Mike's total taxable compensation in 2020 is $40,000. He made a Roth IRA contribution in the amount of $6,000 on April 1, 2020 for tax year 2020. How much can he contribute on a tax deferred basis to a Traditional IRA in tax year 2020? g

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Answers (1)

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Tess Graves · Answer 1

The correct answer is $1,000.

Explanation:

According to the scenario, the given data are as follows:

Mike age = 60 Years

Mike's total taxable compensation = $40,000

Roth IRA contribution = $6,000

So, we can calculate the contribution of Mike to a traditional IRA by using following formula:

According to Laws, For age above 50 years Maximum Combined contribution for Roth IRA and Traditional IRA can be $7,000.

So, Contribution to Traditional IRA = $7,000 - Roth IRA contribution

= $7,000 - $6,000

= $1,000