Which statement describes the key difference between a traditional IRA and a Roth IRA?

A

Atraditional IRA is an employer-sponsored program, while a Roth IRA is opened and managed by an individual.

B

A Roth IRA is an employer-sponsored program, while a traditional IRA is opened and managed by an individual.

C

Roth IRA contributions are made with pretax dollars, while traditional IRA contributions are made with after-tax dollars.

D

Traditional IRA contributions are made with pretax dollars, while Roth IRA contributions are made with after-tax dollars.

Question

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Mathematics

7 February, 00:21

Which statement describes the key difference between a traditional IRA and a Roth IRA?

A

Atraditional IRA is an employer-sponsored program, while a Roth IRA is opened and managed by an individual.

B

A Roth IRA is an employer-sponsored program, while a traditional IRA is opened and managed by an individual.

C

Roth IRA contributions are made with pretax dollars, while traditional IRA contributions are made with after-tax dollars.

D

Traditional IRA contributions are made with pretax dollars, while Roth IRA contributions are made with after-tax dollars.

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Answers (1)

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Perkins · Answer 1

"Traditional IRA contributions are made with pretax dollars, while Roth IRA contributions are made with after-tax dollars" statement describes the key difference between a traditional IRA and a Roth IRA.

Option: D

Explanation:

A traditional IRA that is an individual retirement account enables investors to channel pre-tax income into assets that can increase tax postponed. Donations to a traditional IRA might be tax deductible focusing on the earnings, tax filing record and other considerations of the taxpayers.

A Roth IRA is a tax-favored retirement savings account that enables you to tax-free withdraw your savings. These are sponsored with after-tax dollars; tax-deductible investments are not. But the cash is tax-free until one begin withdrawing funds.