Traditional IRA

WHO CAN CONTRIBUTE?

  • Anyone under age 70 1/2 with income for compensation.

HOW MUCH CAN I CONTRIBUTE?

  • Totaled combined contributions to Roth and Traditional IRAs up to $2,000 per year or 100% of compensation, whichever is less.

WHO CAN MAKE DEDUCTIBLE CONTRIBUTIONS?

  • A single person who does not participate in an employer retirement plan can deduct all contributions, regardless of income.
  • A single person who participates in an employer retirement plan and has MAGI (modified adjusted gross income from the federal tax form) of $30,000 or less can deduct all contributions. The 2,000 maximum deduction is phased out between $30,000 - $40,000 of MAGI.
  • A married couple where neither person participates in an employer retirement plan can deduct all contributions, regardless of income.
  • A married person who participates in an employer retirement plan can deduct all IRA contributions if they file a joint tax return showing MAGI of $50,000 or less. The $2,000 maximum deduction is phased out between $50,000 - $60,000 of joint MAGI.
  • A married person who does not participate in an employer retirement plan who is married to someone who is in an employer retirement plan can deduct all IRA contributions if the person files a tax return showing MAGI of $150,000 or less. The 2,000 maximum deduction is phased out between $150,000 - $160,000 of MAGI.

WHAT ARE THE TAX ADVANTAGES?

  • Earnings compound without tax until withdrawn, usually outearning taxable, Non-IRA investments.
  • Contributions may be tax-deductible.

CAN I WITHDRAW FROM THE ACCOUNT?

Withdraw penalty-free for:
  • Qualified educational expenses.
  • First-time home purchases.
  • At age 59 1/2.
  • If you become disabled.
  • Qualifying medical expenses (withdrawal of earnings and deductible contributions results in taxable income).
  • Payment of beneficiaries at owner's death.
  • Health insurance premiums while unemployed.