Question

Gene, age 34, and Beth, age 32, have been married for nine years. Gene, who is a college student, works part-time and earns $1,500. Beth is a high school teacher and earns a salary of $34,000.

Required:
a. What is the maximum amount Gene can contribute to an IRA in 2016?
b. What is the maximum amount Beth can contribute to an IRA in 2016?

Answer 1

a. $5,500

b. $5,500

Step-by-step explanation:

During 2016, the maximum contribution per person was $5,500 ($6,500 if older than 50) or 100% of taxable income, whichever is lower. Since both spouses work, they can both contribute to their own IRA accounts. Assuming that they file their taxes jointly, then they can both contribute the maximum amount (it doesn't matter who earns more money) since their combined AGI is higher than $11,000.