IRA Quiz

What is an Individual Retirement Account (IRA)?

• An Individual Retirement Account (IRA) is a personal savings plan that allows individuals to set aside money for retirement, providing tax advantages for retirement savings.
• IRAs are designed to encourage individuals to save for retirement by providing a tax-advantaged way to invest for the future.

Who can use an IRA?

• Any individual with earned income can use an IRA, including self-employed individuals and small business owners.
• Spouses of individuals with earned income can also contribute to an IRA, even if they themselves do not have earned income.

Benefits of an IRA

• Contributions to an IRA may be tax-deductible, reducing taxable income and resulting in lower tax bills.
• Earnings on IRA investments grow tax-deferred, meaning individuals won't have to pay taxes on investment gains until withdrawal.
• Withdrawals are taxed as ordinary income, but individuals may be in a lower tax bracket during retirement.
• IRAs provide a supplemental source of retirement income, in addition to other retirement plans, such as 401(k) or pension plans.
• IRAs can be inherited, allowing individuals to pass on retirement savings to beneficiaries.

Test your knowledge about Individual Retirement Accounts (IRAs) and learn about the tax advantages and long-term savings benefits they offer for individuals with earned income.