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Retirement Beginner: Introduction to Individual Retirement Accounts (IRAs)

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1.
How many times per year may an IRA be rolled over?
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Once. This is the present limit.
2.
If you want to contribute to your IRA for this year, you have until December 31 to do it.
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False. You have until April 15 (or the official tax day) of NEXT year to contribute.
3.
For married couples filing taxes jointly, as income rises above a certain phase-out point, the deductibility of IRA contributions ________.
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Falls. The higher the adjusted gross income after a certain point, the more the deductibility drops.
4.
How much is the penalty on an excess contribution to an IRA?
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6 percent. You will be charged 6 percent of the excess that you contribute.
5.
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.
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True. Once you reach a certain level defined by the IRS, your deductibility begins to drop.
6.
Under which of the following conditions will you be penalized if you withdraw money from your traditional IRA prematurely?
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Buying a car for the first time. This is not allowed.
7.
What is the name for the party that holds funds you contribute to your IRA?
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Custodian. When holding funds, the party is referred to as a custodian.
8.
Premature withdrawals and insufficient distributions from individual retirement accounts may be taxed.
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True. You can be penalized for them.
9.
If the contributions you make to your IRA are taxed this year, they will be _______ when you withdraw them.
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Non-taxable. They can be taxed only once.
10.
Your income never plays a part in how much of your IRA contributions you can deduct from your taxable income.
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False. Your income plays a part if you are also covered by an employer-sponsored retirement plan.