Valerie (age 52) & Stephen (age 55) McNamara have been married for 25 years and have one adult child, Tom, who is living on his own. They purchased their current home 7 years ago for $550,000. Valerie & Stephen file joint tax returns. The table below summarizes their financial data for tax purposes. Use this information when you are answering the questions that follow. Amount $100,000 $120,000 $22,700 $11,750 $15,683 $1,800 Tax Item Stephen's Earnings Valerie's Earnings Federal Tax Withholdings State Income Tax Withholdings FICA & M/C Savings Account Interest (2.5% per year) State Refund from Prior Year Home Mortgage Interest Paid (original mortgage on home valued at 500,000.) Real Estate Taxes Paid Charitable Contributions Unreimbursed Medical Expenses Stock Ownership: Union Motor Company (purchased 9 months ago & which they still hold) Whole Life Insurance Policy $1,200 $12,500 $16,500 $1,000 $2,800 Current Value: $4,000 Cost basis: $10,000 Face Value: $100,000 Cash Value: $8,800 Owner: Stephen Beneficiary: Valerie Insured: Stephen Policy Dividend: $300 The McNamares itemized deductions for their federal return last year. Currently, neither Valerie nor Stephen has access to a qualified retirement plan through their work and they have not funded IRAs up to this point in time. They have access to a Section 125 flexible spending account through Valerie's employer. To date, they have not funded the account. Open enrollment is coming up and lasts for the next 30 days. For purposes of solving this case, use the tax information shown below. 15. If the McNamaras want to contribute the maximum allowable amount to a regular IRA, what would the tax benefits be this year? Explain your response. Stephen is considering changing jobs. The new employer offers a Section 125 plan. Would Stephen benefit by participating in this? Why or why not? Explain your response. 16. Valerie (age 52) & Stephen (age 55) McNamara have been married for 25 years and have one adult child, Tom, who is living on his own. They purchased their current home 7 years ago for $550,000. Valerie & Stephen file joint tax returns. The table below summarizes their financial data for tax purposes. Use this information when you are answering the questions that follow. Amount $100,000 $120,000 $22,700 $11,750 $15,683 $1,800 Tax Item Stephen's Earnings Valerie's Earnings Federal Tax Withholdings State Income Tax Withholdings FICA & M/C Savings Account Interest (2.5% per year) State Refund from Prior Year Home Mortgage Interest Paid (original mortgage on home valued at 500,000.) Real Estate Taxes Paid Charitable Contributions Unreimbursed Medical Expenses Stock Ownership: Union Motor Company (purchased 9 months ago & which they still hold) Whole Life Insurance Policy $1,200 $12,500 $16,500 $1,000 $2,800 Current Value: $4,000 Cost basis: $10,000 Face Value: $100,000 Cash Value: $8,800 Owner: Stephen Beneficiary: Valerie Insured: Stephen Policy Dividend: $300 The McNamares itemized deductions for their federal return last year. Currently, neither Valerie nor Stephen has access to a qualified retirement plan through their work and they have not funded IRAs up to this point in time. They have access to a Section 125 flexible spending account through Valerie's employer. To date, they have not funded the account. Open enrollment is coming up and lasts for the next 30 days. For purposes of solving this case, use the tax information shown below. 15. If the McNamaras want to contribute the maximum allowable amount to a regular IRA, what would the tax benefits be this year? Explain your response. Stephen is considering changing jobs. The new employer offers a Section 125 plan. Would Stephen benefit by participating in this? Why or why not? Explain your response. 16