2
lesson pretestMultiple Choice

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Question 2 • Mathematics for Data and Financial Literacy

Which key advantage is part of a Roth IRA?

Answer
A
Earnings grow tax-free, and qualified withdrawals are tax-free.
B
There are no income limits for contributions.
C
Contributions are tax-deductible.
D
Employers make contributions on behalf of employees.

Explanation

A Roth IRA is funded with after-tax contributions, so contributions are not tax-deductible. Its key advantage is that investment earnings can grow tax-free and qualified withdrawals are tax-free. Employer contributions are typical of some workplace plans, not a standard Roth IRA feature, and Roth IRA contributions are subject to income limits.

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