Final answer:
True, Earnings on nondeductible IRA contributions, like those in a Roth IRA, accumulate tax-free and withdrawals are also tax-free if conditions are met. This is true.
Step-by-step explanation:
The earnings on nondeductible IRA contributions (such as those made to a Roth IRA) are indeed allowed to accumulate tax-free until they are withdrawn. This statement is true. With a Roth IRA, contributions are made with after-tax dollars, allowing for tax-free growth and tax-free withdrawals in retirement, provided that certain conditions are met. In contrast, a Traditional IRA allows for deferral of taxes on contributions and earnings until withdrawal, where they are then taxed as ordinary income. Since the Roth IRA is funded with after-tax dollars, the contributions themselves are not deductible.