Which of the Following Statements Regarding Traditional IRAs Is True

question 17

Multiple Choice

Which of the following statements regarding traditional IRAs is true?

• A)Once a taxpayer reaches age 55 years of age she is allowed to contribute an additional $1,000 a year.
• B)Taxpayers with high income are not allowed to contribute to traditional IRAs.
• C)Taxpayers who participate in an employer-sponsored retirement plan are allowed to deduct contributions to a traditional IRA regardless of their AGI.
• D)A single taxpayer with no earned income is not allowed to deduct contributions to traditional IRAs.

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Definitions:

Future Value

The amount of money an investment is expected to grow to over a period of time, considering interest or returns.

Unequal Payments

Payments that vary in amount over a period, commonly seen in loan repayments or investment returns that do not have a fixed payment schedule.

Rate Of Return

The upward or downward movement in the worth of an investment for a predefined interval, calculated as a percentage of the investment's inaugural cost.

Discount Rate

The Discount Rate is the interest rate used to determine the present value of future cash flows in discounted cash flow analysis.