Exercise 9-11 (b) (LO. 6)

Santiago, aged 44, is married, filing jointly. He is covered by another qualified plan, but his wife is not. Their combined AGI is $194,000 in 2020. Click here to access Concept Summary 9.4.

If an amount is zero, enter "0". Do not round intermediate computations.

In 2020, he can make a deductible contribution of $fill in the blank 1 to a traditional IRA or a nondeductible contribution of $fill in the blank 2 to a Roth IRA.

Concept Summary 9.4 Comparison of IRAs Traditional Deductible IRA Maximum contribution $6,000 * (per year) Nondeductible IRA Roth IRA $6,000 * $6,000 * Yes No No Tax-deductible contribution Yes Yes Yes Tax-free growth of income N/A Beginning of AGI phaseout for active participant (2020) $65,000 single, $104,000 joint $124,000 single, $196,000 joint Income tax on distributions Yes, for entire distribution Yes, for the earnings portion No, if satisfy 5- year holding period * Yes No 50% excise tax: age 72 Yes insufficient distributions 10% early withdrawal Yes, with penalty (before age exceptions 5974) Yes, with exceptions Yes, with * exceptions * Concept Summary 9.4 Comparison of IRAs Traditional Deductible IRA Maximum contribution $6,000 * (per year) Nondeductible IRA Roth IRA $6,000 * $6,000 * Yes No No Tax-deductible contribution Yes Yes Yes Tax-free growth of income N/A Beginning of AGI phaseout for active participant (2020) $65,000 single, $104,000 joint $124,000 single, $196,000 joint Income tax on distributions Yes, for entire distribution Yes, for the earnings portion No, if satisfy 5- year holding period * Yes No 50% excise tax: age 72 Yes insufficient distributions 10% early withdrawal Yes, with penalty (before age exceptions 5974) Yes, with exceptions Yes, with * exceptions *