Question

Roth IRA tax advantages include which of the following. a. Exemption from required minimum distribution rules,as long as the original account owner is still alive, b. Federal estate tax exemption for Roth IRA balances, c. Federal income tax deduction for Roth IRA contributions, d. Exemption from required minimum distribution rules for all beneficiaries of inherited Roth accounts.

Answer 1

Answer:

Correct answer is:

a. Exemption from required minimum distribution rules, as long as the original account owner is still alive

Explanation:

Roth IRA contributions are not tax deductible. Roth IRA contributions are made from income on which tax is paid. As such option c is incorrect.

The RMD (Required minimum distributions) rules are not applicable to Roth IRA as long as original account owner is alive. As such option a is correct.

However, when owner dies, by 31 Dec of the year after the year in which the owner died, one must start taking required minimum distributions (RMD) annually. As such option d is incorrect.

Neither traditional IRA nor Roth IRA balances are exempt from Federal estate tax. As such option b is incorrect.