Sammy, age 31, is unmarried and is not an active participant in a qualified retirement plan. His modified AGI is $55,000 in 2012.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:
A)$2,800.
B)$3,500.
C)$4,000.
D)$5,000.
E)None of the above.

Question

Quizplus · Accepted Answer

For tax year 2012, the maximum deductible amount for an individual making contributions to a Traditional IRA is $5,000, or their taxable compensation for the year, whichever is smaller. Since Sammy's modified AGI is $55,000 and he is not an active participant in a qualified retirement plan, he is eligible for the full deduction. Therefore, the maximum amount that Sammy can deduct for a contribution to a traditional IRA in 2012 is $5,000.

Sammy, Age 31, Is Unmarried and Is Not an Active