Sally, who is single and age 40, made deductible IRA contributions in several early years, but has not been eligible to make deductible IRA contributions for the last 5 years because she is covered under her employer's plan. Her AGI is $100,000. She is interested in making IRA contributions in the current year. What advice would you give her?

A

While Sally's AGI of $100,000 is still too high to deduct contributions to a deductible traditional IRA (maximum AGI of

$87,000

for

2023

for single taxpayers who are active participants in an employer-sponsored plan), she certainly is eligible to contribute up to

$7,000

to a Roth IRA as the Roth IRA AGI limit for

2023

is

$138,000

before the phase-out begins. She also is eligible to contribute to a nondeductible IRA, but the Roth IRA is much superior to the nondeductible IRA.

B.

While Sally's AGI of $100,000 is still too high to deduct contributions to a deductible traditional IRA (maximum AGI of

$83,000

for

2023

for single taxpayers who are active participants in an employer-sponsored plan), she certainly is eligible to contribute up to

$6,500

to a Roth IRA as the Roth IRA AGI limit for

2023

is

$138,000

before the phase-out begins. She also is eligible to contribute to a nondeductible IRA, but the Roth IRA is much superior to the nondeductible IRA.

C.

While Sally's AGI of $100,000 is still too high to deduct contributions to a deductible traditional IRA (maximum AGI of

$83,000

for

2023

for single taxpayers who are active participants in an employer-sponsored plan), she certainly is eligible to contribute up to

$7,000

to a Roth IRA as the Roth IRA AGI limit for

2023

is

$139,000

before the phase-out begins. She also is eligible to contribute to a nondeductible IRA, but the Roth IRA is much superior to the nondeductible IRA.

D.

There are no alternatives available to Sally. Her participation in the employer sponsored plan makes her ineligible to contribute to either a Roth IRA or a nondeductible IRA.