Traditional IRA

A Traditional IRA is a tax-deferred retirement account for individuals who exceed the maximum income level to contribute directly to a Roth IRA, or for those who wish to deduct contributions.

Traditional IRA Account Details

Features and Benefits

  • Earnings compound tax-deferred until they are withdrawn at age 59½ or later.
  • If you qualify, annual contributions are tax-deductible.
  • Ability to convert non-deductible Traditional IRA contributions to a Roth IRA tax-free.
  • You may be able to withdraw assets penalty-free.
  • You are eligible to contribute if you are a participant in a 401(k) or other retirement plan.

Annual Contribution Limits

  • Contribute up to $6,500 or 100% of compensation, whichever is less.
  • If you are age 50 or over, you may make an additional contribution of $1,000, for a total annual contribution of $7,500.


  • Anyone under age 70½ with earned income at least equal to an IRA contribution.
  • Non-working spouse of a wage earner if a joint return is filed.
  • Anyone earning too much to contribute to a Roth IRA.
  • You must be under 70½ years of age with earned income (custodians may make a contribution for children 18 and younger to a Traditional IRA for Minors).

Contribution Deductions

Full deductions if:

  • You or your spouse does not participate in an employer-sponsored plan.
  • You or your spouse participates in an employer-sponsored plan and your modified adjusted gross income is below $98,000; below $61,000 for single filers.

Partial deductions if:

  • You participate in an employer-sponsored plan and your modified adjusted gross income is $98,000-$118,000 if you’re married, filing jointly; $61,000-$71,000 for single filers or head of household; and up to $10,000 if you’re married, filing separately.
  • You’re married, filing jointly, and your spouse is covered by an employer-sponsored retirement plan, but you are not, and your modified adjusted gross income is $184,000-$194,000. If your modified AGI is $194,000 or more, you cannot take a deduction.


  • Account must be established by the tax filing deadline (without extensions) for the tax year to which your qualifying contribution(s) will apply. (Applications must be postmarked by this date to be accepted).
  • Contributions for the previous year can be made until the deadline for filing taxes for that year. (Example, contributions for 2023 must be made by April 15, 2024).

Taxes on Withdrawals of Contributions

  • Ordinary federal income tax on deductible contributions.
  • No tax on nondeductible contributions.
  • State taxes may apply.

Taxes on Withdrawals of Earnings

  • Ordinary federal income tax.
  • State taxes may apply.

Penalty for Early Withdrawals

  • 10% federal penalty tax if you’re under age 59½ unless an exception applies.

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