Question

1. select all of the statements that are a true characteristic of a traditional ira. (hint: choose 2 correct answers)

a. any money you save into a traditional ira is tax deductible
b. there is no limit on the amount of money you can contribute to a traditional ira
c. you are taxed on the money in your traditional ira when you withdraw it in retirement (it is taxed as ordinary income)
d. you never have to pay taxes when contributing money to a traditional ira

Explanation:

• Option a: Contributions to a Traditional IRA may be tax - deductible, but not always "any" money (e.g., if you or your spouse are covered by an employer - sponsored retirement plan and have a certain income, the deduction may be limited or phased out), but it is a common characteristic.
• Option b: There are annual contribution limits for Traditional IRAs, so this is false.
• Option c: When you withdraw money from a Traditional IRA in retirement, the withdrawals are taxed as ordinary income. This is a key characteristic.
• Option d: You don't pay taxes on the money when you contribute to a Traditional IRA (the tax is deferred until withdrawal), so this is a true characteristic.

Answer:

c. You are taxed on the money in your Traditional IRA when you withdraw it in retirement (it is taxed as ordinary income)
d. You never have to pay taxes when contributing money to a Traditional IRA