Which of the following describes a difference between a Roth IRA and a traditional IRA?
I. Anyone with earned income can contribute to a traditional IRA, but not everyone with earned income can make contributions to a Roth IRA.
II. The contributions made to a traditional IRA may be tax deductible, but the contributions made to a Roth IRA are never tax deductible.
III. Contributions made to a Roth IRA may be withdrawn without penalty at any time whereas contributions to a traditional IRA may only be withdrawn without penalty when the contributor reaches 59 ½ or if the contributor meets some specific requirements (e.g., becomes disabled.)
IV. When a contributor to a traditional IRA turns 70 ½, he must begin making mandatory withdrawals, but there are no mandatory withdrawals with a Roth IRA.

Question

Quizplus · Accepted Answer

All four selections describe differences between a Roth IRA and a traditional IRA. Only those below a stipulated income level may contribute to a Roth IRA, which is not the case with a traditional IRA although with the traditional IRA, the contributions will not be tax deductible if the contributor's income is above a certain level. Contributions made to a Roth IRA are never tax deductible and may be withdrawn without penalty at any time. Even non-tax-deductible contributions made to a traditional IRA may not be withdrawn early without penalty. There is a minimum distribution requirement associated with a traditional IRA when the contributor turns 70 ½, but there is no such requirement associated with a Roth IRA.

Which of the Following Describes a Difference Between a Roth