Question

Donna, age 42 and a single taxpayer, has a salary of $104,500 and interest income of $20,000. What is the maximum amount Donna can contribute to a Roth IRA

Answer 1

Donna can contribute up to $6,000 to a Roth IRA.

Step-by-step explanation:

A single taxpayer like Donna can contribute to a Roth IRA up to a certain limit based on their income. In 2021, the maximum contribution for someone with a modified adjusted gross income (MAGI) of less than $125,000 is $6,000, or $7,000 if they are age 50 or older. However, the contribution limit gradually decreases as the MAGI increases. For Donna, with a salary of $104,500, her MAGI is below the threshold, so she can contribute the full maximum amount to a Roth IRA, which is $6,000.