IRA IRA Contribution Rules 2

Question 1

What happens if an individual contributes more than the allowed IRA limit in a given year?

Accepted Answer

A 6% excise tax is imposed on the excess amount

Answer

The excess is automatically refunded

Answer

The IRA is disqualified

Answer

A 10% penalty applies

Question 2

Can a non-working spouse contribute to an IRA if the other spouse has earned income?

Accepted Answer

Yes, through a spousal IRA

Answer

No, only working individuals can contribute

Answer

Only if they file separately

Answer

Only if they are age 59½ or older

Question 3

What is the maximum IRA contribution if a taxpayer's earned income is $3,000 for the year?

Accepted Answer

$3,000

Answer

$7,000

Answer

$6,500

Answer

$0

Question 4

Which form is used to report IRA contributions to the IRS?

Accepted Answer

Form 5498

Answer

Form 1099-R

Answer

Form 8606

Answer

Form W-2

Question 5

How are non-deductible traditional IRA contributions tracked for tax purposes?

Accepted Answer

Form 8606

Answer

Form 1099-R

Answer

Form 5498

Answer

Schedule D

Question 6

A self-employed individual with a SEP-IRA can ALSO contribute to a traditional or Roth IRA.

Accepted Answer

True, but only if income allows

Answer

False, they are mutually exclusive

Answer

True, always

Answer

False, unless the SEP-IRA is empty