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Traditional IRA

A Traditional IRA is an Individual Retirement Account to which you can contribute pre-tax or after-tax dollars, giving you immediate tax benefits if your contributions are tax-deductible. With a Traditional IRA, your money can grow tax-deferred, but you’ll pay ordinary income tax on your withdrawals, and you must start taking distributions after age 72. Unlike with a Roth IRA, there are no income limitations to open a Traditional IRA. It may be a good option for those who expect to be in the same or lower tax bracket in the future.

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There is no income limit for a Traditional IRA, and depending on how much you make and whether you are in an employer retirement plan, your contributions may be tax-deductible. Current contribution limits:

  • $6,000 if you're under age 50.

  • $7,000 if you’re age 50 or older.

See Traditional IRA withdrawal rules

  • Age 59½ and under: Taxes and 10% penalty apply.

  • Age 59½ to 72: Taxes apply, but there is no 10% early withdrawal penalty.

  • Age 72 & over: Taxes apply. Required Minimum Distributions (RMD) are required.

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