Question

Joyce, age 40, and Sam, age 42, who have been married for seven years, are both active participants in qualified retirement plans. Their total AGI for 2015 is $120,000. Each is employed and earns a salary of $65,000. What are their combined deductible contributions to traditional IRAs?

a. $0
b. $3,000
c. $4,000
d. $8,000
e. None of the above

Answer 1

Joyce and Sam, both active participants in qualified retirement plans with an AGI of $120,000, exceed the 2015 income phase-out range for deductible traditional IRA contributions, so their combined deductible contribution is $0.

Step-by-step explanation:

When determining the deductible contributions to traditional IRAs for Joyce and Sam, we first recognize that they are both active participants in qualified retirement plans with a total AGI of $120,000 for 2015. This income level places them above the threshold for fully deductible IRA contributions at that time. According to the IRA deduction limits for the tax year 2015, the phase-out range for a married couple filing jointly, where both spouses actively participate in a retirement plan at work, starts at $98,000 and ends at $118,000. Since Joyce and Sam's combined AGI exceeds this limit, they cannot deduct their IRA contributions.

Therefore, their combined deductible contribution is $0.