Qualified Distributions from Traditional IRAs Are Nontaxable While Qualified Distributions

question 24

True/False

Qualified distributions from traditional IRAs are nontaxable while qualified distributions from Roth IRAs are fully taxable as ordinary income.

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Definitions:

Novation

The act of replacing an obligation to perform with a new obligation or replacing a party to an agreement with a new party.

Discharging Contract

Discharging a contract refers to the process by which parties are released from their obligations under the contract, for reasons such as fulfillment of the contract terms, mutual agreement, or impossibility of performance.

Third Party

An entity that is not directly involved in a transaction or agreement but may be affected by it or have an interest in it.

Obligee

The party in a contract who is entitled to receive a performance or service from another party (the obligor).