Which of the following statements about the money invested in a traditional IRA account is correct?

Question

A.it isn't taxed until it's withdrawn.
B.it's subject to double taxation.
C.it's taxed as you make deposits.
D.it isn't taxed.

Answer 1

Deposits into traditional IRAs are usually made with money that has already been taxed (withholding on paychecks).

Annuities, however, are usually built up with pre-tax money, so withdrawals from these are subject to income taxes.