Answer the following independent questions with respect to a deductible IRA and
ID: 2490271 • Letter: A
Question
Answer the following independent questions with respect to a deductible IRA and § 401(k) contributions for 2014:
a. Govind, age 31, earns a salary of $26,000 and is not an active participant in any other qualified plan. His wife has $600 of compensation income. The maximum total deductible contribution to their IRAs is $.
b. Danos is a participant in a SIMPLE § 401(k) plan. He contributes 6% of his salary of $42,000, and his employer contributes 3%.
The amount of his total contributions to his SIMPLE § 401(k) account for the year is $, and his employer's total contributions are $. The amount that will vest immediately is $.
Explanation / Answer
a.
Someone may contribute up to $5,500 to their IRA for 2014. If you are at least age 50 by the end of the year to which the contribution applies, you may contribute an additional $1,000. This additional amount is referred to as a catch-up contribution.
If your eligible compensation is less than $5,500/$6,500, then you are eligible to contribute only up to the amount you earn for the year.
Thus,
Maximum deductible Amount for Mr. Govind because of less than 50 years is $ 5,500.
and,
for his wife Because of compensation is less than 5,500 she can contribute Total $ 600 to their IRA.
b.
Total Contribution of Danos = Salary* % of Contribution = $42,000*6% =$ 2,520
Total Contribution of HIs employer = Salary* % of Contribution = $42,000*3% = $ 1,260