Feb 28

A) are taxed, but the interest in the fund accumulates tax free
B) reduce your taxes, but the interest income on the IRA is taxed in the year that it is earned
C) reduce your taxable income. the funds in the IRA and the return on the IRA are not taxed until the funds are disbursed in your retirement years.
D) are not taxed once when they are placed in the IRA and again when they are disbursed from the IRA

2 comments so far...

  • Chris h Said on February 28th, 2010 at 11:36 am:

    C. that’s how a traditional IRA works.

    A is a description of a Roth IRA.

    Edit for Big Woof – There is a limit to the amount of money you can make in a year and still contribue to a traditional IRA. I don’t know the exact number for this year.

  • Big Woof Said on February 28th, 2010 at 11:44 am:

    After pouring over your question, it would be C. It is tough to determine what the income below federal limits refers to. It must mean IRA limits, not taxable income limit.

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