Traditional IRAs are retirement plans that have the potential to be tax-deferred; you won't pay taxes on your contributions until you withdraw the funds. Currently, contributions can be made as long as you have earned income and you're below the age of 70½.
- Tax Treatment - Tax deduction in contribution year; ordinary income taxes owed on withdrawals
- Withdrawal Rules - Withdrawals are tax-free and penalty free beginning at age 59½. Distributions must begin at age 70½; beneficiaries pay taxes on inherited IRAs.
- Extra Benefits - Contributions lower taxpayer’s Adjusted Gross Income (AGI), potentially qualifying them for other tax incentives; up to $10,000 penalty-free withdrawals to cover first-time home buyer expenses, but taxes due on distributions.
Consult your tax advisor for full details.Go to main navigation