The benefit of a(n) _____ is that the contributions you make reduce your taxable income in the same tax year, and the earnings on your contributions are tax deferred, allowing them to grow more rapidly.
A) mutual fund
B) Roth IRA
C) exchange traded fund
D) traditional IRA

Question

Quizplus · Accepted Answer

The benefit described is specific to a traditional IRA. Contributions to a traditional IRA reduce taxable income in the same tax year, and earnings on contributions are tax-deferred. Mutual funds and exchange-traded funds are investment options, but they do not offer tax benefits in the same way that IRAs do. Roth IRAs offer tax-free earnings on contributions, but contributions are not tax deductible in the same year.

The Benefit of A(n) _____ Is That the Contributions You