Question

One of your customers, age 52, wishes to open an IRA. His annual income is more than $200,000 and consists entirely of income from rental real estate and income from a trust fund. What amount may your customer contribute to his IRA this year?

Answer 1

$0

Step-by-step explanation:

your IRA contributions are based on your earned income, and earned income means money that you earned by working. A person can contribute up to $6,000 per year or $7,000 if they are older than 50, to an IRA account as long as their earned income is higher than that amount.

But this client only has passive income, rental income and a trust fund, so his earned income is $0. Since he has no earned income, he cannot contribute any money to an IRA account.