Question

Jane, age 55, tells you that she earns $12,000 and is not an active participant in a qualified plan. How much can she contribute to a Roth IRA in 2020?

a.) $7,000
b.) $0
c.) $6,000
d.) $2,000

Answer 1

Jane, age 55, can contribute $7,000 to a Roth IRA in 2020, as she is not an active participant in a qualified plan, and falls within the income limits for contribution.

Step-by-step explanation:

Jane, who is age 55 and earns $12,000, is not an active participant in a qualified plan. She can contribute to a Roth IRA in 2020. Given that the contribution limit for individuals over 50 is $6,000 plus a $1,000 catch-up contribution, Jane can contribute a total of $7,000 to her Roth IRA, as her income is within the limits that allow for full contribution.