Question

which statements are true regarding a traditional individual retirement account? choose three correct answers. people can withdraw money penalty-free at any time. contributions to the account are limited each year. employers create them and match employee contributions. people can contribute to the account until retirement age. contributions reduce taxable income.

Explanation:

1. Analyze "People can withdraw money penalty - free at any time": Traditional IRAs have penalties for early withdrawals (before 59.5), so this is false.
2. Analyze "Contributions to the account are limited each year": Traditional IRAs have annual contribution limits set by the IRS, so this is true.
3. Analyze "Employers create them and match employee contributions": Traditional IRAs are individual accounts, not employer - sponsored (employer - sponsored like 401(k)s), so this is false.
4. Analyze "People can contribute to the account until retirement age": Individuals can contribute to a traditional IRA until they reach the age of 70.5 (for those born before July 1, 1949; now the age has changed with new rules, but generally, contributions are allowed until a certain retirement - related age), so this is true.
5. Analyze "Contributions reduce taxable income": Contributions to a traditional IRA are tax - deductible, which means they reduce the taxpayer's taxable income, so this is true.

Answer:

• Contributions to the account are limited each year.
• People can contribute to the account until retirement age.
• Contributions reduce taxable income.