SIE Exam Question 478: Answer and Explanation

Question: 478

A client who is 65 years old has invested $10,000 in a Roth IRA. It has now grown to $14,000. He plans to retire and take a lump sum distribution. He will pay taxes on:

• A. $14,000.
• B. $10,000.
• C. $4,000.
• D. $0.

Correct Answer: C

Explanation:

C: The money has been deposited in a Roth IRA after taxes. It is allowed to grow tax deferred. If you are over 59.5 and the money has been in the IRA for at least 5 years, then it may all be withdrawn without paying taxes on the growth.