Traditional IRA Retirement by J.P. Morgan

A traditional IRA is an individual retirement account where you can make tax-deductible contributions. Accounts aren’t taxed until you make a withdrawal. Traditional IRA options are available to anyone with earned income for the year.

Traditional IRA contributions may be tax-deductible for the year they are made, depending on your income and whether you have a workplace retirement plan.

If you are under the age of 50, the annual maximum is $6,000. If you are 50 or above, the annual maximum is $7,000. While eligibility for the tax deduction is dependent on income and involvement in other employer plans, all adults with income may contribute the maximum amount.

You can typically begin to make withdrawals from a traditional IRA at age 59 ½. If you withdraw before then, you may incur a penalty.

A rollover IRA is a type of traditional IRA that was funded by your prior employer-sponsored plan, like a 401(k) or 403(b). You may be eligible for a rollover IRA if you have a qualifying event, such as changing employers.

Contributions to traditional IRAs may be tax-deductible, and withdrawals are taxed when made during retirement. Traditional IRAs have Required Minimum Distributions (RMDs) beginning at age 72.

Contributions to Roth IRAs are made with taxed income and withdrawals during retirement are not taxed. Roth IRAs do not have RMDs.