Baxter Is a Office Manager Who Works for Allied Company

question 145

Multiple Choice

Baxter is a office manager who works for Allied Company and is covered under its retirement plan.Baxter's AGI is $69,000,and he wants to contribute $2,000 to either an IRA or his employer's salary-reduction plan.Since he is in the 25 percent marginal tax bracket,he would save ____ in taxes by using the IRA and ____ by using the salary-reduction plan.

• A)$400; $400
• B)$400; $0
• C)$0; $400
• D)$0; $0