Which of the following statements regarding IRAs is false?
A) Taxpayers who participate in an employer-sponsored retirement plan may be allowed to make deductible contributions to a traditional IRA.
B) The ability to make deductible contributions to a traditional IRA and nondeductible contributions to a Roth IRA may be subject to phase-out based on AGI.
C) A taxpayer may contribute to a traditional IRA in 2017 but deduct the contribution in 2016.
D) Taxpayers who have made nondeductible contributions to a traditional IRA are taxed on the full proceeds when they receive distributions from the IRA.

Question

Quizplus · Accepted Answer

If taxpayers make nondeductible contributions to a traditional IRA, they are taxed on only a portion of any distributions received. That is, the distribution is split into an income portion and a nontaxable return of capital portion.

Which of the Following Statements Regarding IRAs Is False