IRA Contributions

Question 1

What are some examples of Earned Income when making contributions to IRAs

Answer 1

Wages
Salaries
Tips
Bonuses
Commissions
Professional Fees
Combat Pay
Certain stipend, fellowship, and similar payments to graduate students
Difficulty of care payments

Question 2

What are some examples NOT Earned Income when making contributions to IRAs

Answer 2

Taxable Alimony - was at one time
Interest
Royalties - gets complicated but generally no
Dividends
Rental Income
Unemployment Compensation
Disability Pay
Child Support
Separation and Early Retirement
Social Security
AFDC - Aid to Families with Dependent Children
TANF - Temporary Aid for Need Families

Question 3

What are the requirements for Traditional IRA Regular Contribution Eligibility

Answer 3

• Earned Income - Have to have it
• Age - Never a minimum age. Used to be 70 1/2, now no limit with Secure Act starting Jan 1, 2020. 70 1/2 for prior years.

Question 4

What are the requirements for Roth IRA Regular Contribution Eligibility

Answer 4

• Earned Income - Have to have it
• MAGI within limit
• No age limits -> min or max

Question 5

Who is responsible for determining IRA Contribution deductibility

Answer 5

The IRA Owner, not financial institutions

Question 6

If IRA owner is not an Active Participant and their spouse is not an Active Participant, what % of the Contribution is Deductible

Answer 6

100%

Question 7

If IRA owner is an Active Participant and/or Spouse is an Active Participant. Deductibility is dependent on what

Answer 7

MAGI

Question 8

The 2020 Deductibility Phase Out Range for Traditional IRA Owner who is Single and Active Participant

Answer 8

65K to 75K MAGI

Question 9

The 2020 Deductibility Phase Out Range for Traditional IRA Owner who is Married, Files a Joint Return, and is an Active Participant

Answer 9

104K to 124K MAGI

Question 10

The 2020 Deductibility Phase Out Range for Traditional IRA Owner who is Married, Files Individual Return, and is an Active Participant

Answer 10

0 to 10K MAGI

Question 11

The 2020 Deductibility Phase Out Range for Traditional IRA Owner who is Married, Is not Active Participant, but Spouse is

Answer 11

$196K to $206K MAGI regardless of filing Joint or Individual Return

Question 12

Exam Note

Answer 12

Need to know the formula for deductibility if MAGI falls within Phase Out Range

Question 13

What are common IRA Investments

Answer 13

Mutual Funds
Money Market Funds
Bonds
Stocks
CDs
Real Estate
US Govt Securities
Coins