Traditional IRA

Traditional IRA’s

This type of individual retirement account is specifically designed as a tax-deferred retirement savings account. In other words, the money you save is taxed when you take withdrawals, preferably in retirement. This is different from a Roth IRA, whereby, the Roth IRA grows tax-free, but is funded with post-tax dollars.

Advantages

Contributions can be tax deductible

If you’re not covered by an employer retirement plan, such as a 401(k), you can deduct the entire amount of your IRA contribution.

Income limit

One can invest in a traditional IRA at any level of income, with no maximum limit.

Mandatory Distributions

By April 1 of the calendar year following the year you turn 72 years of age, you must begin taking required minimum distributions, also known as, RMD’s.

Resources: IRS Details for Traditional IRA’s