What Is the Maximum Deductible Contribution That Erick (Age 32

question 16

Multiple Choice

What is the maximum deductible contribution that Erick (age 32 and single) can make in 2018 to an Individual Retirement Account(s) if he earns $62,000 and is not covered by an employer-sponsored retirement plan?

• A) $6,500 ($5,500 plus an extra $1,000 catch-up contribution) to a traditional IRA and zero to a Roth IRA.
• B) $5,500 to a traditional IRA but only $1,500 additional to a Roth IRA
• C) $5,500 to a traditional IRA
• D) $4,500 to a traditional IRA due to the income limitation AGI Phase-Out Ranges for 2018 IRAs

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Definitions:

Student Loans

Borrowed money that is used to pay for higher education expenses, which must be repaid with interest.

Compounded Monthly

A method where interest earnings are calculated and added to the principal sum each month, leading to increased interest in the next period.

Mortgage Loan

A loan secured by real property through the use of a mortgage note.

Savings Account

A financial account at a bank or similar institution that ensures the security of the original sum while yielding a slight return in interest.