With a traditional IRA, your contributions are tax-deductible, meaning you won’t pay taxes on your money until retirement. If you expect your tax rate during retirement to be lower than it is today, or if you want to reduce taxable income now, this option may be a better fit for you.
- Contribute up to $6,000 of earned income per year, or $7,000 if you're 50 and over, until you are 70½ years old1
- Contributions may be tax-deductible if you meet certain conditions1
- Funds can be withdrawn without penalty once you reach the age of 59 1/2, or before that subject to a 10 percent penalty unless exceptions apply2
- Distributions must begin by April 1st of the year following the year you reach age 70½
- Anyone under 70½ who has earned income is eligible
- Traditional IRAs can generally be converted to Roth IRAs, although tax consequences may apply1