Exercise

Answer true or false.

1. 1. _____ Both the traditional IRA and the Roth IRA allow contributions of after-tax dollars.
2. 2. _____ An employee is limited in the amount he may contribute to a traditional IRA if he has another retirement plan account.
3. 3. _____ Traditional and Roth IRAs have similar limits on contributions and required minimum distributions
4. 4. _____ 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. 5. _____ 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. 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 Any after-tax contributions can be withdrawn from the traditional IRA tax-free, but the individual must show evidence that taxes were paid on these contributions.
2. 2. True. An employee is limited in the a