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.
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.
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.