PROBLEM 5

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 $190,000 of AGI for 2016.

a. What is the maximum amount that Raul can contribute to a traditional IRA and how much can he deduct? (Show calculation)

b. What is the maximum amount that Raul can contribute to a Roth IRA and how much can he deduct? (Show calculation)

c. How could Raul contribute to both the traditional IRA and Roth IRA to maximize current and future tax savings? (Show calculation)