SIE Exam Question 359: Answer and Explanation

Question: 359

Which of the following is a key difference between a Traditional IRA and a Roth IRA?

• A. Roth IRAs are not available to everyone with earned income, but Traditional IRAs are.
• B. Annual contribution limits are higher in Traditional IRAs
• C. A 10% penalty for withdrawals before age 59 ½ exists only in a Traditional IRA, not a Roth IRA
• D. The annual contribution deadline is different

Correct Answer: A

Explanation:

A - Roth IRAs are not available to everyone with earned income. Instead, only individuals who earn below a certain threshold can contribute to a Roth. In contrast, any investor with earned income is eligible to invest in a traditional IRA.