Question

During 2017, jacob, a 19 year old full-time student, earned $4,500 during the year and was not eligible to participate in an employer-sponsored retirement plan. the general limit for deductible contributions to an ira during 2017 is $5,500. how much of a tax-deductible contribution can jacob make to an ira? $0 (full-time students are not allowed to participate in iras). $500. $4,500. $5,500.

Answer 1

The correct answer is $4,500.

A 19 year old full time student with earned income is eligible to make a tax deductible contribution into an individual retirement account. Jacob is limited to a maximum of $4,500 because that is the amount of his earned income for the year.