John and Elizabeth have come to you for the following tax advice. They file jointly and have an Adjusted Gross Income of $150,000. They are both 52 years old and active participants in their employer's retirement plan. They are trying to decide whether they should contribute to a Traditional or Roth IRA. They also want to know the maximum they can contribute to either the Traditional IRA or the Roth IRA. When researching these questions refer to your text book and Pub. 590A. Page 5 of Pub. 590A is extremely helpful. A. What is the maximum they can contribute to either IRA? Note where you found your answer either in Pub. 590A or your text book. B. If they contribute to the traditional IRA how much would they be able to deduct on their 2021 tax return? Note where you found your answer either in Pub. 590A or your text book. C. If they contribute to the Roth IRA how much would they be able to deduct on their 2021 tax return? Note where you found your answer either in Pub. 590A or your text book. D. Would you recommend that they contribute the maximum amount to the traditional IRA or the Roth IRA for 2021? Explain to John and Elizabeth the reasons for your recommendations. 2021 AGI Phase-Out Ranges for Roth IRA Contributions Filing Status AGI Phase-Out Range Single or HOH $125,000 $140,000 Married filing jointly $198,000-$208,000 Note: Active plan participation status is not relevant to the Roth IRA phase-out calculation. Special rules apply to married filing separate taxpayers. 2021 AGI Phase-Out Ranges for Deductible Traditional IRA Contributions Type of Taxpayer AGI Phase-Out Range Single or HOH, not a plan participant No phase-out Single or HOH, active plan participant $66,000 $76,000 Married filing jointly, both active participants $105,000 $125,000 Married filing jointly, neither active plan participants No phase-out Married filing jointly, one an active participant: (See Note 1 below) Active participant spouse $105,000 $125,000 (Joint AGI) Nonactive participant spouse $198,000 $208,000 (Joint AGI) Note 1: When one spouse is an active participant in a retirement plan and the other is not, two separate income limitations apply. The active participant spouse may make a full deductible IRA contribution unless the $105,000-$125,000 phase-out range applies to the couple's joint income. The spouse who is not an active participant may make a full deductible IRA contribution unless the higher $198,000-$208,000 phase- out range applies to the couple's joint income. - John and Elizabeth have come to you for the following tax advice. They file jointly and have an Adjusted Gross Income of $150,000. They are both 52 years old and active participants in their employer's retirement plan. They are trying to decide whether they should contribute to a Traditional or Roth IRA. They also want to know the maximum they can contribute to either the Traditional IRA or the Roth IRA. When researching these questions refer to your text book and Pub. 590A. Page 5 of Pub. 590A is extremely helpful. A. What is the maximum they can contribute to either IRA? Note where you found your answer either in Pub. 590A or your text book. B. If they contribute to the traditional IRA how much would they be able to deduct on their 2021 tax return? Note where you found your answer either in Pub. 590A or your text book. C. If they contribute to the Roth IRA how much would they be able to deduct on their 2021 tax return? Note where you found your answer either in Pub. 590A or your text book. D. Would you recommend that they contribute the maximum amount to the traditional IRA or the Roth IRA for 2021? Explain to John and Elizabeth the reasons for your recommendations. 2021 AGI Phase-Out Ranges for Roth IRA Contributions Filing Status AGI Phase-Out Range Single or HOH $125,000 $140,000 Married filing jointly $198,000-$208,000 Note: Active plan participation status is not relevant to the Roth IRA phase-out calculation. Special rules apply to married filing separate taxpayers. 2021 AGI Phase-Out Ranges for Deductible Traditional IRA Contributions Type of Taxpayer AGI Phase-Out Range Single or HOH, not a plan participant No phase-out Single or HOH, active plan participant $66,000 $76,000 Married filing jointly, both active participants $105,000 $125,000 Married filing jointly, neither active plan participants No phase-out Married filing jointly, one an active participant: (See Note 1 below) Active participant spouse $105,000 $125,000 (Joint AGI) Nonactive participant spouse $198,000 $208,000 (Joint AGI) Note 1: When one spouse is an active participant in a retirement plan and the other is not, two separate income limitations apply. The active participant spouse may make a full deductible IRA contribution unless the $105,000-$125,000 phase-out range applies to the couple's joint income. The spouse who is not an active participant may make a full deductible IRA contribution unless the higher $198,000-$208,000 phase- out range applies to the couple's joint income