Question

Liam is 58 years old and retired in 2022. He receives a pension of $25,000 a year and no other income. He wishes to put the maximum allowed into an IRA. How much can he contribute to an IRA?

Answer 1

Liam, who is retired with a pension as his sole income at the age of 58, cannot contribute to an IRA because contributions must be made from earned income, not pension income.

Step-by-step explanation:

Liam, who is 58 and retired in 2022 with a pension as his only income, is interested in making the maximum contribution to an Individual Retirement Account (IRA). The contribution limit for individuals aged 50 and older for both 2014 and 2015 is $6,500 per year, which likely remains similar for subsequent years unless tax laws have changed. However, it's important to note that IRA contributions must be made from earned income, which does not include pension income. Therefore, if Liam has no other earned income, he cannot contribute to an IRA based on his pension income alone.