Which of the following statements regarding individual retirement accounts (IRAs) is true?
A) Traditional IRAs can be opened by anyone with a modified adjusted gross income (MAGI) of more than $50,000.
B) A 10% tax penalty applies to any funds withdrawn from a traditional IRA before 70½.
C) Withdrawals from Roth IRAs are tax free, so long as the account has been open for 5 years and the individual is past the age of 59½.
D) It is not possible to convert a traditional IRA to a Roth IRA.
E) Contributions made to traditional IRAs are made with after-tax dollars.

Question

Quizplus · Accepted Answer

Withdrawals from Roth IRAs are tax-free after age 59½ as long as the account has been open for at least 5 years. A 10% tax penalty applies to withdrawals made from traditional IRAs before 59½. It is possible to convert a traditional IRA to a Roth IRA, but it will result in a taxable event. There is no income limit for opening a Traditional IRA, but there are income limits for contributing to a Roth IRA. Contributions made to traditional IRAs may be tax-deductible, depending on income level and whether the individual is covered by an employer-sponsored retirement plan.

Which of the Following Statements Regarding Individual Retirement Accounts (IRAs)