Recommendations & StrategiesQuestion 50 of 110
Which account type generally allows contributions of after-tax dollars with qualified withdrawals being tax-free in retirement?
a.Traditional IRA
b.401(k) with pre-tax contributions
c.SEP IRA
d.Roth IRA
Explanation
A Roth IRA is funded with after-tax dollars, and qualified withdrawals in retirement, including earnings, are tax-free. Traditional IRAs, standard 401(k)s, and SEP IRAs typically use pre-tax contributions that are taxed upon withdrawal. The Roth's tax-free growth is its defining feature.
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