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Portfolios 204: Primer to Individual Retirement Accounts

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1.
Which of the following may fund a Roth IRA?
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A bond that does not pay periodic interest. This is called a zero coupon bond, and it is allowed as an IRA investment. The others are not.
2.
You can generally have both a Roth and a traditional IRA.
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True. However, you will be penalized if you exceed the yearly contribution limit.
3.
Which of the following is not allowed to fund an IRA?
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Cash value life insurance. Neither this nor collectibles are allowed as IRA investments.
4.
The traditional individual retirement account has all of the following characteristics except for ______.
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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.
5.
In a _______ individual retirement account, the money you contribute to it has already been taxed.
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Roth. Your contributions come out of your net pay, meaning they have already been taxed.