Question

Which of these statements about traditional individual retirement accounts is accurate?

a) 10% penalty is applied to withdrawals after age 59 1/2
b) Withdrawals are normally tax-free to the recipient
c) 10% penalty is applied to withdrawals prior to age 59 ½
d) Contributions are not tax deductible

Answer 1

The accurate statement about traditional individual retirement accounts (IRA) is that a 10% penalty is applied to withdrawals prior to age 59 ½.

Step-by-step explanation:

The accurate statement about traditional individual retirement accounts (IRA) is:

c) 10% penalty is applied to withdrawals prior to age 59 ½

Withdrawals from traditional IRAs before the age of 59 ½ are subject to a 10% penalty in addition to the regular income tax. This penalty is designed to discourage early withdrawals from retirement accounts and encourage individuals to save for retirement. After age 59 ½, withdrawals from traditional IRAs are generally subject to regular income tax but not a penalty.