Which retirement accounts allow catch-up contributions for individuals aged 50 or older?

• A. Roth IRA Only
• B. Traditional IRA Only
• C. Neither Roth nor Traditional IRA Allows Catch-Up
• D. Roth IRA and Traditional IRA

Answer: (D)

The idea being tested is that catch-up contributions are available to people aged 50 or older and apply to both types of IRAs. When you’re 50 or older, you can contribute an extra amount beyond the usual annual limit to either a Traditional IRA or a Roth IRA. This extra amount is designed to help boost retirement savings as you near retirement, and it applies the same way whether you choose the Traditional or the Roth account. So, you can take advantage of catch-up contributions in both accounts, which is why the correct answer is that both Roth IRA and Traditional IRA allow catch-up. (Note: the catch-up is in addition to the regular limit, and the exact dollar amounts depend on the year.)