Question

An individual has been contributing to a retirement account after taxes are taken out of his paycheck. His financial advisor told him that he will be allowed to make contributions after age 70½. The account owner does not have to pay taxes on the growth of his account. What type of retirement account is it?

Answer 1

The correct answer is B) Roth IRA.

Step-by-step explanation:

Roth IRA accounts are an exceptionally flexible savings option that offers the potential for deferred tax earnings and tax-free withdrawals.

• Pay taxes when you contribute and, in return, you can make withdrawals (qualified with tax exemption) of potential earnings for your contributions.
• Make withdrawals when you're ready and without having to meet minimum distribution requirements.
• Keep contributing for as long as you want even after reaching retirement age.
• Leave your heirs property without federal income taxes.