IRA Traditional IRA Tax Rules and Deductibility 2

Question 1

For 2024, at what modified adjusted gross income (MAGI) does the traditional IRA deductibility phase-out begin for a single filer covered by a workplace retirement plan?

Accepted Answer

$77,000

Answer

For 2024, the deductibility phase-out for single filers covered by a workplace plan begins at $77,000 MAGI and is fully phased out at $87,000.

Question 2

For 2024, a married person filing jointly who is NOT covered by a workplace plan but whose spouse IS covered faces a deductibility phase-out range of:

Accepted Answer

$230,000–$240,000

Answer

For 2024, the non-covered spouse's IRA deductibility phases out between $230,000 and $240,000 MAGI when the other spouse participates in a workplace plan.

Question 3

A married individual filing separately who is covered by a workplace retirement plan faces a deductibility phase-out range starting at:

Accepted Answer

$0

Answer

Married individuals filing separately who are covered by a workplace plan have a phase-out range of $0 to $10,000, making full deductibility nearly impossible.

Question 4

Which type of income qualifies as earned income for traditional IRA contribution purposes?

Accepted Answer

Self-employment net earnings

Answer

Net self-employment earnings count as earned income for IRA contribution purposes, while passive income such as dividends, capital gains, and rent do not.

Question 5

Under the Tax Cuts and Jobs Act, alimony received from divorce agreements finalized after December 31, 2018 is treated as:

Accepted Answer

Not earned income for IRA contribution purposes

Answer

Alimony from post-2018 divorce agreements is no longer deductible by the payer or included in the recipient's income, so it does not count as earned income for IRA purposes.

IRA - Individual Retirement Account Practice Test

IRA - Individual Retirement Account Practice Test

IRA Traditional IRA Tax Rules and Deductibility 2