Traditional IRA

 

With a Traditional IRA your contributions are tax deductible. Any earnings grow tax-deferred until you withdraw them in retirement. Investment options include mutual funds, stocks, bonds, ETFs and FDIC-insured CDs.

 

Contribution Limits

 

Traditional IRA contribution limits are currently $5,500 annually (or up to 100% of earned income, if lower), provided that the investor is not eligible to participate in another qualified retirement plan and adjusted gross income (AGI) levels lie within established income guidelines. The traditional IRA contribution limit increases to $6,500 annually for those over 50 years of age (this is referred to as a “catch-up contribution”). Investors with spouses covered by employer-sponsored retirement plans may have the level of deductibility modified based on AGI. There are no traditional IRA contribution minimums, although some plans require a minimum to initially open a traditional IRA account.

 

Rules

 

  • Withdrawals from Traditional IRAs cannot be made before age 59 ½ (without penalty), with required minimum distributions starting at age 70 ½.
  • A 10% penalty will be administered for withdrawals that occur prior to age 59 ½, in addition to taxation of withdrawal amounts.
  • All withdrawals will be taxed at investor’s current income tax rate.
  • Investors must be 18 years old to open a traditional individual retirement account.

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    Mandatory Distributions

     

    You must begin taking distributions from a Traditional IRA by April 15th of the following year after you reach the age of 70 ½. After that you must take your distributions by the end of each calendar year (Dec. 31st). Distributions are based on the value of your account and life expectancy. You can take the required amount from each of your IRA accounts, or you can take the required amount out of just one account, provided the overall distribution amount is correct. If you do not take your required distribution the IRS will impose penalties – which can be substantial. However you can always take more than the minimum required.

     

    Contact Us:

     

    To find out more about a Traditional IRA, either call our office at (855) 846-ACAP, fill out our brief contact form or email us at [email protected].