Asked by Annemarie Richardson on Jun 27, 2024
Verified
Which of the following statements regarding Individual Retirement Accounts (IRA) is incorrect?
A) Contributions to a conventional IRA may be tax-deductible while contributions to a Roth IRA are never tax-deductible.
B) Excess contributions to an IRA are subject to an excise tax.
C) Because IRA contributions are based on compensation,a non-working spouse cannot make a contribution to an IRA.
D) Once a taxpayer reaches age 70½,deductible contributions cannot be made to a conventional IRA.
Conventional IRA
Likely meant to be "Traditional IRA," which is an individual retirement account that offers tax-deferred growth and potential tax-deductible contributions.
Excise Tax
A tax on the sale or use of specific products or transactions, often included in the price of goods such as gasoline, alcohol, and tobacco.
Roth IRA
A retirement savings account allowing for tax-free growth and tax-free withdrawals in retirement.
- Analyze the tax effects and perks involved in making contributions to and distributions from retirement plans.
- Discern the differences among retirement planning strategies, specifically between plans supported by employers and those personally set up by individuals.
Verified Answer
ZK
Zybrea KnightJul 03, 2024
Final Answer :
C
Explanation :
A non-working spouse can contribute to an IRA through a spousal IRA, provided the other spouse has sufficient earned income. This allows the non-working spouse to have an IRA in their name, despite not having earned income themselves.
Learning Objectives
- Analyze the tax effects and perks involved in making contributions to and distributions from retirement plans.
- Discern the differences among retirement planning strategies, specifically between plans supported by employers and those personally set up by individuals.