Test your knowledge

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The party that holds funds you contribute to your IRA is called the collection agent.

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True

False

False. It is called the custodian.

You can generally have both a Roth and a traditional IRA.

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True

False

True. However, you will be penalized if you exceed the yearly contribution limit.

What is the name for the party that holds funds you contribute to your IRA?

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Transfer agent

Collection agent

Custodian

Bank

Custodian. When holding funds, the party is referred to as a custodian.

The traditional individual retirement account has all of the following characteristics except for ______.

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Earnings that grow tax-deferred

Contributions that may not be tax-deductible

Contributions that are never tax-deductible

Contributions that are taxed when you withdraw them

Contributions that are never tax-deductible. They can be if certain conditions are met. It is the Roth IRA whose contributions are never deducted from taxable income.

If you are unmarried and you earn no money at all from work this year, how much can you contribute to an individual retirement account for this year?

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Nothing

The full allowable amount

The amount you would have been able to contribute last year

An amount between $0 and the full allowable amount

Nothing. If you are unmarried, you must have earned income in order to contribute.

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