What is a Traditional IRA?
A Traditional IRA is a type of individual retirement account in which individuals can make pre-tax contributions and the investments in the account grow tax deferred. Depending on your income, your contribution may be tax deductible. You pay no taxes on any investment earnings until you withdraw or “distribute” the money from your account, presumably in retirement.
With a Traditional IRA, you’ll pay ordinary income tax on your withdrawals, and you must start taking distributions at age 73.
Unlike with a Roth IRA, there are no income limitations to open a Traditional IRA. It may be a good option for those who expect to be in the same or lower tax bracket in the future.
Due to the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), beginning in tax year 2020, there is no maximum age restriction for making a Traditional IRA contribution as long as you, or your spouse if filing jointly, have earned income.