Which of the following statements is correct concerning contributions to a traditional IRA?

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The statement regarding full deductions being allowed for those not participating in employer plans is correct because traditional IRA contributions can indeed be fully deducted from taxable income for individuals who do not have access to a retirement plan through their employer. This means that if a taxpayer is not covered by a workplace retirement plan, they can deduct the full amount of their traditional IRA contributions, regardless of their income level.

For taxpayers who participate in an employer-sponsored retirement plan, the ability to deduct traditional IRA contributions may be limited based on their modified adjusted gross income (MAGI). This deduction phase-out applies when the taxpayer's income exceeds certain thresholds. Consequently, individuals without access to an employer's retirement plan benefit from a straightforward deduction, which encourages saving for retirement.

The other options do not align with the tax rules governing traditional IRAs. Contributions are not universally deductible, they are not all subject to income tax when made, and there are no age-based limits on deductible contributions for individuals based solely on being under 50. Therefore, the statement concerning full deductions for those not participating in employer plans is the most accurate and reflective of IRS rules.

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