True or False: A $5,000 contribution to a Roth IRA in the 15% tax bracket reduces taxable income by $750.

The statement is false because contributions to a Roth IRA do not reduce taxable income. Unlike traditional IRAs, where contributions may be tax-deductible and reduce your taxable income for the year, Roth IRA contributions are made with after-tax dollars. This means that the contribution amount, in this case, $5,000, does not provide any immediate tax benefit by lowering your taxable income.

The benefit of a Roth IRA lies in the tax-free growth and tax-free withdrawals in retirement, provided certain conditions are met. Thus, regardless of your tax bracket, contributing to a Roth IRA does not affect your current taxable income, which is why the assertion that a $5,000 contribution reduces taxable income by $750 is incorrect.