Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

To determine Allen Baker's allowable IRA deduction, it is essential to consider the rules governing Individual Retirement Accounts (IRAs), specifically focusing on adjusted gross income (AGI) and any applicable contribution limits.

If Allen's AGI exceeds certain thresholds set by the IRS, he may not be able to deduct his entire contribution to a traditional IRA. Generally, the IRA deduction begins to phase out at specific income levels, especially if he is covered by a retirement plan at work. If his AGI is above the phase-out range, which can differ based on filing status and whether he is participating in an employer-sponsored retirement plan, he may face reduced deduction limits or even be entirely ineligible to deduct contributions.

In this case, if the context implies that Allen's AGI is sufficiently high enough to disallow any IRA deduction, the correct response indicates that his allowable IRA deduction would indeed be zero. This reflects the IRS rules in limiting the deductibility of IRA contributions when income levels exceed specified limits, making the answer accurate in this context.