Intuit Academy Tax Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

An Individual Retirement Account (IRA) is fundamentally a tax-advantaged retirement savings account, which is why this choice is the correct answer. The primary purpose of an IRA is to provide individuals with a means to save for retirement in a way that offers certain tax benefits. Contributions to a traditional IRA may be tax-deductible depending on the individual's income and other factors, and the funds within the account grow tax-deferred until withdrawal during retirement.

Moreover, there are different types of IRAs, such as Traditional IRAs and Roth IRAs, each with distinct tax implications. In a Traditional IRA, taxes are generally paid upon withdrawal, whereas in a Roth IRA, contributions are made with after-tax dollars, and qualified withdrawals are tax-free.

The other choices do not accurately describe what an IRA is. A tax-exempt investment account does not capture the specific retirement savings aspect of an IRA. Similarly, a type of savings bond does not relate to retirement savings and instead refers to a government-issued debt security. Lastly, an account for educational expenses is not aligned with the primary function of an IRA, as it does not focus on retirement savings but rather on saving for education costs. Thus, the definition of an IRA as a tax-advantaged retirement savings