SIE practice questionmediumTypes of Retirement Accounts
A 45-year-old investor wants to open an IRA account. Which action is MOST consistent with the rules on IRA contributions?
- ABorrowing money in the account to maximize contributions
- BContributing any amount of money, regardless of income
- COnly investing in municipal bonds
- DContributing earned income up to the IRS annual limit✓ Correct answer
Explanation
Why D — Contributing earned income up to the IRS annual limit
IRA contributions must come from earned income and are limited annually by the IRS. IRAs can hold many types of permitted investments, but borrowing in the IRA to fund contributions is not allowed.
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