Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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Enhance your competence for the Series 6 Exam. Study with expertly crafted multiple-choice questions, each complete with hints and detailed explanations. Elevate your performance and pass the exam with confidence.

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Is it allowable for an individual to contribute to both a Keogh Plan and an IRA?

Yes, contributions are allowed
No, both plans are restrictive
Only if the contributions exceed a certain limit
Yes, but only under specific conditions

The correct answer is: Yes, contributions are allowed

An individual can indeed contribute to both a Keogh Plan and an IRA because the IRS allows for such contributions as long as the individual meets the eligibility requirements for both accounts. A Keogh Plan, which is often used by self-employed individuals or small business owners, has its own contribution limits and rules, while an IRA offers additional tax advantages and savings options. It's important to understand that although both accounts have their own contribution limits, an individual can benefit from having both. For instance, the contribution limits for a Keogh Plan are generally higher compared to those for an IRA, allowing for greater retirement savings potential. Additionally, contributions to each plan can provide tax advantages in different ways, enhancing an individual’s financial strategy for retirement. The other options imply restrictions that are not accurate in the context of these retirement accounts. This flexibility in retirement savings options is beneficial for individuals working to build a secure financial future.