Question

All of the following are features of a Roth IRA, EXCEPT:

A. Contributions may be deductible
B. Qualified withdrawals at retirement are tax-free
C. The maximum annual contribution is the lesser of $6,000 or 100% of earned income
D. A five-year holding period must be satisfied for a distribution to bequalified

Answer 1

A Roth IRA is a tax-free investment account where contributions are made after taxes and qualified withdrawals at retirement are tax-free.

Step-by-step explanation:

A Roth IRA is a type of Individual Retirement Account where contributions are made after taxes, and qualified withdrawals at retirement are tax-free. This means that any earnings on your contributions grow tax-free and you do not need to pay taxes on the withdrawals at retirement. The maximum annual contribution limit for a Roth IRA is the lesser of $6,000 or 100% of earned income. Additionally, there is a requirement of a five-year holding period to be satisfied for a distribution to be qualified.