Arizona Life and Health Practice Exam

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In an individual retirement account rollover, contributions are?

Not limited by dollar amount
Limited to $6,000 annually
Only allowed from employer-sponsored plans
Taxed at the end of the rollover

The correct answer is: Not limited by dollar amount

In the context of an individual retirement account (IRA) rollover, it is important to note that there are indeed no dollar amount limits imposed on contributions when rolling over funds from one qualifying retirement account to another. This means that individuals can transfer an unlimited amount of money from their existing retirement accounts into their new IRA, provided that the transfer adheres to IRS rules regarding rollovers, such as needing to complete the rollover within a specific time frame and ensuring the funds are moved between eligible accounts. Other options present incorrect statements regarding IRA rollovers: There is no limit on the amount that can be rolled over, distinguishing it from annual contribution limits, which are in place for regular IRA contributions. For the parameters surrounding rollovers, the focus is more on eligibility and procedures rather than a dollar cap, allowing for greater flexibility and strategic retirement planning.