Traditional Individual Retirement Account (IRA)
What is a Traditional IRA?
A Traditional or Contributory IRA is a personal retirement plan designed to give working individuals a way to contribute to their own retirement accounts.
What may I deduct?
You may be able to deduct all or part of your contributions, depending on your income level and coverage by an employer sponsored plan. You may also make an additional contribution to a separate IRA if you are a married couple with a wage earning spouse and a non-wage earning spouse. Also, if age 50 or older, you may make a special catch-up contribution.
Is the money taxed?
The earnings within a Traditional IRA grow tax-deferred until such time as they are withdrawn from the account.
When may I access my IRA?
Distributions from contributions and earnings can be taken after age 59½ without penalty. Mandatory withdrawals must begin at age 70½. Premature distributions are subject to a 10% penalty tax unless you qualify for the following exceptions:
- you're age 59½
- you're disabled
- you're taking substantially equal periodic payments
- the distribution is for certain medical bills
- the distribution is used for health insurance premiums during unemployment lasting at least 12 weeks
- the distribution is for qualified education expenses
- the distribution is used to purchase a first home (up to $10,000 lifetime maximum)
For more information about IRAs and other retirement plans, contact us.
