Consider the following information for two investors, who are currently working

Question

Consider the following information for two investors, who are currently working and earning. They are contemplating opening individual retirement accounts. They currently do not qualify for a 401K account.

                                                                 Investor 1/Investor 2

Current tax bracket at the time of deposit    15%             30%

Future tax bracket at the time of withdrawal 30%            15%

A. Investor 1 should open a traditional IRA rather than Roth IRA as it is a better financial choice for her/him

B. Investor 2 should open a Roth IRA rather than a classic IRA as it is a better financial choice for her/him

C. If they do not qualify for 401k plan then they do not qualify for individual retirement accounts

D. Investor 2 should open a traditional IRA rather than Roth IRA as it is a better financial choice for her/him

E. Investor 1 should not open an IRA as it does not offer any benefits

Explanation / Answer

Ans;

D. Investor 2 should open a traditional IRA rather than Roth IRA as it is a better financial choice for her/him

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