Raul and Jenna Are Married and Are Both Working

question 95

Essay

Raul and Jenna are married and are both working.They are both over age 50.Jenna participates in her employer's Sec.401(k)plan and makes the maximum contribution and enjoys a company matching contribution.Raul's employer does not maintain a retirement plan so he would like to save as much as possible in a tax-advantaged manner for retirement.They expect to report $188,000 of AGI for 2016.
a.What is the maximum amount that Raul can contribute to a traditional IRA and how much can he deduct?
b.What is the maximum amount that Raul can contribute to a Roth IRA and how much can he deduct?
c.How could Raul contribute to both the traditional IRA and Roth IRA to maximize current and future tax savings?

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Definitions:

Deliver to Order

A stipulation in shipping where goods are delivered to a specific party as per the instructions of the shipping document or bill of lading.

Innocent Purchaser

A legal term for someone who buys property without knowledge of any existing claims, disputes, or flaws affecting the property's title.

Stolen Vehicle

A vehicle taken without the owner's consent, often referred to as theft.

Good Faith

An honest intention to act without taking an unfair advantage over another person, underlying many contractual negotiations and agreements.