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1.
What is the name for the party that holds funds you contribute to your IRA?
Custodian. When holding funds, the party is referred to as a custodian.
2.
Your ability to tax-deduct your contributions to an IRA is the same whether you are single or whether you are married and filing taxes separately.
False. The two situations differ based on adjusted gross income and who is covered by an employer retirement plan, and the limits are far apart.
3.
Your income never plays a part in how much of your IRA contributions you can deduct from your taxable income.
False. Your income plays a part if you are also covered by an employer-sponsored retirement plan.
4.
Maria, age 40, received $150,000 from her IRA with the intent of making a rollover. The actual amount she rolled over was $135,000. What will happen to the remaining $15,000?
She will be charged a penalty tax on the $15,000. The IRA that receives rolled-over funds must open with the same amount that was received from the old IRA.
5.
The IRA deductibility phase-out point for the spouse covered by another employee retirement plan is higher than the one for the non-covered spouse.
False. The non-covered spouse has the higher phase-out point, since he or she does not have the benefit of another retirement plan.
6.
There are conditions under which you can escape paying taxes on your IRA contributions.
False. Uncle Sam will tax them in the year you put them in or when you take them out.
7.
Individuals must take distributions from their traditional individual retirement accounts at least once per year after they reach the age of _______.
73. This is a requirement for traditional IRAs. Prior to 2023, the required age was 72.
8.
This year, Jack, who is single, will earn $1,500 from his job. Given how low those earnings are, can he still contribute to his IRA?
Yes. As long as he has earned income, he can contribute. However, $1,500 will be the most he will be allowed to contribute.
9.
Deductible and non-deductible IRAs may be taxed.
True. Their taxability depends on many factors, such as whether they were taxed at contribution time.
10.
This year Robert, age 40, contributed $1,000 more than the allowed limit to his IRA. How much will he have to pay in penalty taxes?
$60. He must pay 6 percent of the excess. Six percent of $1,000 is $60.