Home > Retirement > Beginner
Retirement Beginner: Introduction to Individual Retirement Accounts (IRAs)

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
If some of the contributions to your IRA were deductible and some were not, your withdrawals must be separated accordingly so the proper portions can be taxed.
Choose wisely. There is only one correct answer.
True. What you deducted will be taxed, but what you didn't deduct will not be taxed.
2.
Excess IRA contributions may be taxed.
Choose wisely. There is only one correct answer.
True. This is done to discourage excess contributions.
3.
The amount of your IRA contributions that you can deduct from your taxable income begins to be phased out at a certain level of income.
Choose wisely. There is only one correct answer.
True. Once you reach a certain level defined by the IRS, your deductibility begins to drop.
4.
How much is the penalty on an excess contribution to an IRA?
Choose wisely. There is only one correct answer.
6 percent. You will be charged 6 percent of the excess that you contribute.
5.
What is the name for the party that holds funds you contribute to your IRA?
Choose wisely. There is only one correct answer.
Custodian. When holding funds, the party is referred to as a custodian.
6.
If you are single and not covered by another employer retirement plan, the tax-deductibility of your IRA contributions is ________.
Choose wisely. There is only one correct answer.
Fully allowable. There are no restrictions in this case.
7.
For married couples filing taxes jointly, as income rises above a certain phase-out point, the deductibility of IRA contributions ________.
Choose wisely. There is only one correct answer.
Falls. The higher the adjusted gross income after a certain point, the more the deductibility drops.
8.
If you want to contribute to your IRA for this year, you have until December 31 to do it.
Choose wisely. There is only one correct answer.
False. You have until April 15 (or the official tax day) of NEXT year to contribute.
9.
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?
Choose wisely. There is only one correct answer.
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.
10.
Under which of the following conditions will you be penalized if you withdraw money from your traditional IRA prematurely?
Choose wisely. There is only one correct answer.
Buying a car for the first time. This is not allowed.