What Is the Maximum Deductible Contribution That Erick (Age 32 $\quad$

question 11

Multiple Choice

What is the maximum deductible contribution that Erick (age 32 and single) can make in 2019 to an Individual Retirement Account(s) if he earns $62,000 and is not covered by an employer-sponsored retirement plan?

• A)$7,000 ($6,000 plus an extra $1,000 catch-up contribution) to a traditional IRA and zero to a Roth IRA.
• B)$6,000 to a traditional IRA but only $1,500 additional to a Roth IRA
• C)$6,000 to a traditional IRA
• D)$4,500 to a traditional IRA due to the income limitation
• AGI Phase-Out Ranges for 2019 IRAs
• \(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\quad \)\(\text { Phase-out range }\)
• \(\begin{array}{lcc}
• \hline & \text { Single } & \text { Married filing jointly } \\
• \text { Traditional } & \$ 64,000-\$ 74,000 & \$ 103,000-\$ 123,000 \\
• \text { Roth } & \$ 122,000-\$ 137,000 & \$ 193,000-\$ 203,000
• \end{array}\)

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Definitions:

Convertible Bonds

Convertible Bonds are a type of corporate bond that holders can convert into a predetermined number of shares of the issuing company's common stock.

Common Stock

A type of equity security that represents ownership in a corporation, with voting rights and potential dividends.

Face Value

The nominal or dollar value printed on a bond, bill, or other financial instrument, indicating its worth at maturity.

Premium

Fee for insurance coverage, usually paid every year by the insured person. The difference between a bond’s par value and its market value when the market value is more. When bonds are sold at a premium, the yield rate will be lower than the stated (face) rate.