What is a Traditional IRA?
IRA stands for Individual Retirement Account. A Traditional IRA is a retirement plan that lets you set aside and invest a set amount of money per tax year. Investing in a Traditional IRA has tax advantages: • Your contributions may be tax-deductible, and you don’t pay taxes on the account’s earnings until you withdraw them. This is an advantage if you expect to be in a lower income bracket when you retire. • Depending on your modified adjusted gross income (an income figure before certain deductions) and if you are eligible for an employer-sponsored retirement plan, part or all of your contribution might be tax-deductible. Consult your tax advisor for complete details.
A. A traditional IRA is a type of retirement plan that has been in existence since 1975. Traditional IRAs offer tax-deferred earnings and the possibility for tax–deductible contributions. These tax advantages make the traditional IRA a powerful tool in creating a balanced, long–term savings plan. This article is not intended as tax advice. Contact a tax professional.
