Exercise
Answer true or false
- 1. True or false. Both the traditional IRA and the Roth IRA allow contributions of after-tax dollars.
- 2. True or false. An employee is limited in the amount he may contribute to a traditional IRA if he has another retirement plan account.
- 3. True or false. Traditional and Roth IRAs have similar limits on contributions and required minimum distributions
- 4. True or false. If an individual sets up a Roth IRA account at the age of 60, and withdraws earnings at the age of 62, he will not be charged a tax penalty on the withdrawal.
- 5. True or false. A working person can contribute to her non-working spouse’s IRA, as long as the couple files a joint return and the working spouse has enough earned income to cover both IRA contributions.
Answers
- 1. True. The traditional IRA provides tax benefits, so it is in the participant’s best interest to maximize before-tax contributions to that account. Any after-tax contributions can be withdrawn from the traditional IRA tax-free, but the individual must show evidence that taxes were paid on thes