Question

Carl is 65 and single. He has no earned income but does make about $10,000 a year from interest and dividends. Carl may contribute to a Roth IRA but not a traditional IRA.

a.) True
b.) False

Answer 1

Carl may contribute to a Roth IRA but not a traditional IRA.

Step-by-step explanation:

Carl is not eligible to contribute to a traditional IRA because he has no earned income. However, he can contribute to a Roth IRA because the contributions are made after taxes. Since Carl makes about $10,000 a year from interest and dividends, he can use this income to contribute to a Roth IRA.

Example: If Carl contributes $5,000 to a Roth IRA, his taxable income remains at $10,000. However, if he had contributed to a traditional IRA, his taxable income would have been reduced by the contribution amount.

In conclusion, the statement is True:

Carl may contribute to a Roth IRA but not a traditional IRA.