Which statement about Roth IRAs is true?

• A. Tax-free withdrawals
• B. Any one with earned income
• C. Non tax deductible contributions
• D. Tax-free interest and return on investments

Answer: (C)

Roth IRAs are funded with after‑tax dollars, so you don’t receive a tax deduction for contributions. That’s why the correct statement is that contributions are non-deductible. Since you’ve already paid taxes on the money, the benefit comes later: qualified withdrawals in retirement are tax-free (including earnings), but this only applies if you meet the rules—the account must have been open for at least five years and you’re at least 59½ (with certain exceptions).

The other options aren’t universally true. Withdrawals aren’t tax-free in all situations unless they’re qualified distributions. Not everyone with earned income can contribute to a Roth IRA—eligibility depends on income limits. And saying you get tax-free interest and return on investments isn’t accurate in all cases, because taxes on earnings are only avoided for qualified withdrawals, not for every distribution or every year of growth.