a. Generally, the earnings on the traditional IRA are tax deferred, whereas the earnings on a Roth IRA are currently taxable. b. Earnings taken from a Roth IRA are tax-free if the taxpayer is at least age 592 and the Roth IRA has existed for five or more years. c. For a traditional nondeductible IRA, only the portion of the plan balance represented by earnings is taxed to the recipient as ordinary income when it is distributed. d. Contributions to a Roth IRA are deductible (with regard to limitations), whereas contributions to a traditional IRA are nondeductible. e. Generally, both the traditional IRA and Roth IRA allow certain taxpayers to contribute up to $6,000 of earned income annually to a retirement plan. f. There is no maximum age for making contributions to a Roth IRA, and there is no mandatory age for withdrawal from a Roth IRA.

a. Generally, the earnings on the traditional IRA are tax deferred, whereas the earnings on a Roth IRA are currently taxable. b. Earnings taken from a Roth IRA are tax-free if the taxpayer is at least age 592 and the Roth IRA has existed for five or more years. c. For a traditional nondeductible IRA, only the portion of the plan balance represented by earnings is taxed to the recipient as ordinary income when it is distributed. d. Contributions to a Roth IRA are deductible (with regard to limitations), whereas contributions to a traditional IRA are nondeductible. e. Generally, both the traditional IRA and Roth IRA allow certain taxpayers to contribute up to $6,000 of earned income annually to a retirement plan. f. There is no maximum age for making contributions to a Roth IRA, and there is no mandatory age for withdrawal from a Roth IRA.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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