United States
"Traditional IRA (Individual Retirement Account)"

What is a Traditional IRA ?

A traditional IRA is a type of individual retirement account in which individuals can make pre-tax contributions and the investments in the account grow tax-deferred.

How the Traditional IRA Works ?

Contributions you make to traditional IRA may be fully or partially deductible, depending on filing status & income. Amounts in your account are not taxed until you take a withdrawal.

Who is Eligible for Traditional IRA ?

Anyone who earns taxable income can contribute to traditional IRA. If you (or your spouse) contributes to a retirement plan at work, then there are income limits.


Contributions Limit for Traditional IRA

For 2023, the annual contribution limit for a traditional IRA is $6,500 or your taxable income, whichever is lower. If you are 50 or older, the contribution limit is $7,500.

Withdrawal Rules of Traditional IRA 

Any deductible earnings & contributions you withdraw from traditional IRA are taxable. At age 59½, you can withdraw money from your traditional IRA. RMD have to start at age 72.

Traditional IRA Penalty for Early Withdrawal

If you take money from traditional IRA before you reach age 59½, might have to pay an additional 10% tax for early withdrawals, unless you qualify for an exception.

How to Open a Traditional IRA ?


To set up a traditional IRA, find a financial institution (like a brokerage firm) that the IRS approves to act as a custodian or trustee for an IRA account.