Burt is 55 and is covered by his employer's SIMPLE IRA plan. In 2018, he earned $75,000. What is the maximum contribution that Burt can make to his SIMPLE IRA in 2018?
$15,500
$18,500
$15,000
$12,500
$25,000
2. Cai, age 42, has funded a traditional IRA with contributions totaling $30,000. The account value in 2018 is worth $40,000. In 2018, Cai is making an investment and he pledges his IRA account balance as collateral for a loan he has incurred to make an investment in a partnership. What, if any, are the tax consequences to Cai? He is in the 20% tax bracket.
$0
$400 penalty
$8,000 ordinary income tax and $4,000 penalty
$8,000 ordinary income tax