A person in the 25 percent tax bracket who invests $1,000 in a traditional IRA immediately postpones $250 in taxes.

Question

Quizplus · Accepted Answer

Funds invested in a traditional IRA are sheltered from current taxes. Earnings of $1,000 would have been taxed at the 25 percent rate, $1,000 x 25% = $250. If the $1,000 is invested in a traditional IRA, the tax liability is deferred until the funds are withdrawn at retirement.

A Person in the 25 Percent Tax Bracket Who Invests