Jose Does Not Have a Retirement Plan at Work

Jose does not have a retirement plan at work. He currently earns $30,000 in salary and is in the 15% marginal tax bracket. If he contributes the maximum contribution of $5,000 to his traditional IRA, how much money will he save on his income tax liability?

A) He won't save any money, since only the Roth IRA has tax deductions on contributions.
B) He won't save any money, since his income does not qualify for tax deductions for a qualified plan.
C) $750
D) $5000

Correct Answer:

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