Question

which statements are true regarding a traditional individual retirement account? choose three answers.
□ employers create them and match employee contributions.
□ people can contribute to the account until retirement age.
□ people can withdraw money penalty - free at any time.
□ contributions to the account are limited each year.
□ contributions reduce taxable income.

Explanation:

1. For "Employers create them and match employee contributions": Traditional IRAs are set up by individuals, not employers (employer - matched accounts are like 401(k)s). So this is false.
2. For "People can contribute to the account until retirement age": Individuals can contribute to a traditional IRA until they reach the age of 70½ (or retirement age - related limits), so this is a true statement.
3. For "People can withdraw money penalty - free at any time": Withdrawals from traditional IRAs before age 59½ usually have a 10% penalty (except for certain exceptions), so this is false.
4. For "Contributions to the account are limited each year": The IRS sets annual contribution limits for traditional IRAs, so this is a true statement.
5. For "Contributions reduce taxable income": Contributions to a traditional IRA are tax - deductible, which means they reduce the taxpayer's taxable income, so this is a true statement.

Answer:

• People can contribute to the account until retirement age.
• Contributions to the account are limited each year.
• Contributions reduce taxable income.