Karen is single and is an active participant in her employer retirement plan. She contributed $5,500, the maximum amount allowable, to an individual retirement account (IRA). For each of the following, select the best answer:
1. ___ She is early in her career and had AGI of $50,000. She expects that when she retires she will be in a higher tax bracket than right now.
2. ___ She is early in her career and had AGI of $65,000. She expects that when she retires she will be in a lower tax bracket than right now.
3. ___ She is early in her career and had AGI of $80,000. She expects that when she retires she will be in a higher tax bracket than right now.
4. ___ She is in her peak career earning years and had AGI of $350,000. She expects that when she retires she will be in a lower tax bracket than right now.
A. Contribute $3,300 to a deductible traditional IRA & $2,200 to a Roth IRA
B. Contribute $2,200 to a deductible traditional IRA & $3,300 to a Roth IRA
C. Contribute $5,500 to a Roth IRA
D. Contribute $5,500 to a deductible traditional IRA.
E. Contribute $5,500 to a non-deductible traditional IRA or, perhaps, pass up the IRA and invest the $5,500 in solid growth stocks that she can buy and hold for the long-term.
F. None of the other answers is correct