Raul and Jenna Are Married and Are Both Working

question 28

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 $185,000 of AGI for 2014.
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:

Declared

An explicit, often formal announcement of a particular status or condition.

Short-form Merger

A merger between a parent company and its subsidiary where the parent absorbs the subsidiary without the need for approval by the shareholders of the subsidiary.

Subsidiary

A company that is completely or majority-owned by another company, known as the parent company.

Merger Plan

A detailed proposal for combining two or more companies into one entity, outlining the terms, conditions, and operational strategies post-merger.