SIE Exam Question 59: Answer and Explanation

Question: 59

What are the tax consequences to an individual who converts a traditional IRA into a Roth IRA?

  • A. There are no tax consequences.
  • B. The amount converted is taxed as income at a flat rate of 15 percent.
  • C. The amount converted is taxed as income at a flat rate of 25 percent.
  • D. The amount converted is taxed as income at the individual’s current tax rate.

Correct Answer: D

Explanation:

The tax consequences to an individual who converts a traditional IRA into a Roth IRA are that the amount converted is counted as income and is subject to the individual's current tax rate.

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