SIE practice questionmediumRetirement Account Taxation
Which statement best describes distributions from a traditional IRA?
- ATaxed at capital gains rates
- BAlways tax-free
- CTaxable as ordinary income when withdrawn at retirement age✓ Correct answer
- DSubject to double taxation
Explanation
Why C — Taxable as ordinary income when withdrawn at retirement age
Withdrawals from traditional IRAs are taxable as ordinary income; they are not always tax-free or subject to capital gains rates. Tax is not applied twice on withdrawals.
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