Question

If an individual is ineligible to make a deductible contribution to a traditional IRA, nondeductible contributions of any amount can be made to a traditional IRA

A) True
B) False

Answer 1

It is false that an individual can make nondeductible contributions of any amount to a traditional IRA; there are still annual contribution limits.

Step-by-step explanation:

The statement that an individual is ineligible to make a deductible contribution to a traditional IRA but can make nondeductible contributions of any amount is false. While it is true that individuals who do not qualify for deductible contributions due to income limitations can still make nondeductible contributions to a traditional IRA, these contributions are still subject to annual limits.

For the tax years 2014 and 2015, for instance, the total contributions to all traditional and Roth IRAs combined cannot exceed $5,500, or $6,500 if the individual is age 50 or older. Contributing beyond these limits can result in penalties.