Which of the following statements are true about a traditional IRA?
I. Subject to an income limit,in 2016 a single person could contribute up to $5,500 per year ($6,500 if over 50 years old)of pretax income to an IRA.
II. All withdrawals are tax-free.
III. Earnings on the IRA account are not taxed until withdrawn.
IV. You must begin withdrawals at age 59½.
V. Withdrawal(s)can be a lump sum or installments.

Question

Quizplus · Accepted Answer

Statement I is true, as there is an income limit for contributing to a traditional IRA and the contribution limit for 2016 was $5,500 (with an additional $1,000 catch-up contribution for those over 50). Statement II is false, as withdrawals from a traditional IRA are taxed as income. Statement III is true, as earnings on the IRA account are not taxed until withdrawn. Statement IV is true, as the IRS requires that individuals begin taking required minimum distributions from their traditional IRA accounts at age 59½. Statement V is true, as withdrawals from a traditional IRA can be taken as a lump sum or in installments. Therefore, the best choice is C, as it correctly identifies the true statements about a traditional IRA.

Which of the Following Statements Are True About a Traditional