Traditional IRA

What is a Traditional IRA?

  • A Traditional IRA allows eligible individuals to invest up to $5,500 of earned income, tax-deferred until age 70 1/2.
  • Plus, contributions to Traditional IRAs are tax-deductible for many taxpayers. Over time, these tax benefits can result in significant investment income and growth.
  • If you are 50 years or older, you may contribute up to $6,500.

Who is eligible to contribute and how much?

  • Any individual under the age of 70 1/2 who has earned income.
  • You may contribute up to a maximum of $5,500 of earned income. If you are 50 years or older, you may contribute up to $6,500.
  • Even if your spouse is not working, you may contribute up to $5,500 into your spouse's IRA or $6,500 if your spouse is 50 years or older, if your earned income allows it.

Are my contributions tax-deductible?

  • The deductibility of your annual contribution depends on your income, marital status and whether you and your spouse receive benefits under an employer's retirement plan.

When can I withdraw my funds?

  • Beginning at age 59 1/2 you can start making withdrawals from your Traditional IRAs with no IRS penalties. (Bank fees may apply if you are breaking terms before account maturity).
  • You can withdraw funds at any time before reaching 59 1/2, but your withdrawal is then subject to a 10% IRS early withdrawal penalty and any additional bank penalties that may apply.
  • The following exceptions apply to the early withdrawal penalty:††
    • Disability
    • Qualifying medical expenses (under certain conditions)
    • Qualifying education expenses
    • Unemployment (under certain conditions)
    • Qualifying first home purchase
    • Death
    • Levy

Am I required to take distributions?

  • Beginning at age 70 1/2, you're required to start taking distributions from your IRA.
  • These distributions are based on the contributors IRA beginning year balance or fair market value using the IRA Uniform Lifetime Table (ULT Table). For more information about this chart, please refer to the IRS Publication-590 (see Appendix C).

Certain qualifications apply. Consult your tax advisor for more information.
†† Your tax advisor and the IRS will need to determine if the exceptions apply.