Jose Does Not Have a Retirement Plan at Work

question 138

Multiple Choice

Jose does not have a retirement plan at work. He currently earns $30,000 in salary and is in the 15% marginal tax bracket. If he contributes the maximum contribution of $5,000 to his traditional IRA, how much money will he save on his income tax liability?

• A) He won't save any money, since only the Roth IRA has tax deductions on contributions.
• B) He won't save any money, since his income does not qualify for tax deductions for a qualified plan.
• C) $750
• D) $5000

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Definitions:

Legal System

The comprehensive set of rules and principles, administered through a series of institutions, that governs society and enforces behavioral norms.

NCRMD

Not Criminally Responsible on Account of Mental Disorder, a legal defense claiming that an individual was mentally ill at the time of committing an offense, thus not responsible for the action.

Mental Disorder

A condition that affects a person's thinking, feeling, behavior, or mood, significantly impacting daily functioning and life.

Charter Of Rights And Freedoms

A component of the Canadian Constitution that protects various civil liberties and rights of individuals from infringements by government actions.