Connecticut Life Producer Practice exam

Who can contribute to a traditional IRA?

1. Individuals or married couples without restrictions

2. Individuals or married couples with earned income, regardless of age

3. Only individuals under 70 years of age with earned income

4. Only married couples filing jointly

The correct answer is: Individuals or married couples with earned income, regardless of age

The correct choice indicates that individuals or married couples can contribute to a traditional IRA as long as they have earned income, regardless of their age. This is important because the Internal Revenue Service (IRS) outlines specific eligibility requirements for contributing to a traditional IRA. Previously, there was a restriction that limited contributions to individuals under the age of 70½ for traditional IRAs. However, the law changed with the SECURE Act, allowing anyone with earned income, regardless of age, to contribute to a traditional IRA. This means that both individuals and couples who have income from working can fully utilize the benefits of a traditional IRA to save for retirement, making this option inclusive and flexible. In the context of the other choices, the first option lacks explicit reference to earned income, making it misleading. The third option erroneously limits contributions to those under 70 years old, neglecting the updated guidelines allowing anyone with earned income to contribute. The last option is overly restrictive, as it exclusively applies to married couples filing jointly, while single individuals can also contribute if they meet the earned income requirement.