Chartered Retirement Planning Counselor (CRPC) Practice Exam

In this scenario, the deduction of IRA contributions is contingent on Lucy and George's Adjusted Gross Income (AGI) and their participation in an employer-sponsored retirement plan. If they have a high AGI that surpasses certain thresholds, they may experience a reduced ability or complete ineligibility to deduct their IRA contributions from their taxable income.

Specifically, if their AGI exceeds the limits set for tax-deductible contributions based on their filing status and other factors such as whether one or both are covered by a retirement plan at work, they may not be allowed to deduct any of their contributions to a traditional IRA. When AGI is above these thresholds, the deduction may become zero, meaning any contributions made would not yield a tax benefit.

In cases where the deduction limit is reached, the maximum deductible amount may not be applicable due to this income restriction. Thus, the correct option reflects the reality that their circumstances lead to a situation where they cannot deduct any amount from their IRA contributions for that tax year.