Raul and Jenna Are Married and Are Both Working

question 97

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 $187,000 of AGI for 2015.
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:

Sex Reassignment

A process or series of procedures through which a person's sex or gender is changed to align with their gender identity, often including hormone therapy and surgery.

Plastic Surgery

Plastic surgery is a medical specialty involving the correction or restoration of form and function, often including procedures intended for cosmetic enhancement as well as reconstructive surgery.

Trapped

Feeling unable to escape a situation, physically or emotionally, often leading to stress or anxiety.

Alarm Reaction

A stage in the General Adaptation Syndrome that involves the initial response to stress, triggering the fight-or-flight response.