Individual Retirement Accounts, or IRAs, offer a way to save for retirement even if you don’t have access to an employer-sponsored plan. Both traditional and Roth IRAs have their own sets of guidelines.
Watch the video to learn more about Personal Investing & Strategy, then test your knowledge at the end of the lesson.
Which of the following best describes a Roth IRA?
A. Contributions are pre-tax, earnings grow tax-deferred and withdrawals are taxable.
B. Contributions are pre-tax, and earnings and withdrawals are taxable income.
C. Contributions are post-tax, and earnings and withdrawals are tax-free.
D. Contributions are post-tax, earnings grow tax-free and withdrawals are taxable.
If you have a retirement plan through your employer, you are not eligible to open an Individual Retirement Account.
A. True
B. False
A 401(k) loan allows you to make an early withdrawal from your retirement savings, but it can lead to:
A. Lower credit score
B. 10% early withdrawal penalty
C. Lower rate of growth
D. Both B & C