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Traditional IRA

A traditional IRA is a tax-advantaged arrangement that allows earnings and deductible contributions to grow tax deferred.

That means you don't pay income taxes on the earnings and deductible contributions of your IRA until you begin taking withdrawals.

Comparing Traditional and Roth IRAs

Eligibility requirements

You must have earned income (compensation) in order to contribute to a traditional IRA.

  • Contributions may be deductible from your gross income on your federal income tax return for the tax year for which the contributions are made.

  • Earnings grow on a tax-deferred basis

  • Deductible contributions and earnings are subject to federal income tax when withdrawn.

  • The Saver's Credit may provide a tax credit for those who save for retirement. You may be able to take a credit of up to $1,000 – up to $2,000 if filing jointly. The credit applies to the first $2,000 contributed to a traditional IRA, Roth IRA, SIMPLE IRA, or 401(k) account by reducing the amount of federal income tax you owe dollar for dollar. However, it is not a refundable tax credit. The credit ranges from 10% to 50% of your contributions and is based on several factors including your filing status, adjusted gross income, and tax liability. Special rules apply.

Visit the IRS website or talk to your tax advisor for more information.

Tax year Under age 50 Age 50 or older
2024 $7,000 $8,000
2023 $6,500 $7,500

You can make annual contributions to a Traditional IRA of up to $6,500 for 2023 ($7,000 for 2024) or 100% of your earned income, whichever is less. Current law permits most couples to contribute up to $6,500 for 2023 ($7,000 for 2024) each to their IRAs as long as their combined compensation is at least $13,000 in 2023 ($14,000 in 2024).

This allows a spouse with lower or no compensation to take advantage of the tax savings offered by an IRA. The annual contribution limits apply to the combination of all of your Traditional and Roth IRAs.

If you are age 50 or older, you may make an additional $1,000 "catch-up" contributions to your IRA.

You can make contributions to a traditional or Roth IRA from Jan 1st to December 31st for the current tax year. You may also make contributions for the prior tax year from January 1st up to the tax filing deadline, excluding extensions, which is generally April 15th. For a prior year contribution a tax year designation must be postmarked by the current year’s income tax filing deadline, which is generally April 15th.

If you are covered by a retirement plan at work, use this table to determine if your income affects the amount of your deduction.

Your tax filing status Tax year Full deduction up to contribution limit Partial deduction No deduction
Single/Head of Household/Married Filing Separately and did not live with your spouse at any time during the year 2024 $77,000 or less More than $77,000, but less than $87,000 $87,000 or more
Married Filing Jointly or qualifying widow(er) 2024 $123,000 or less More than $123,000 but less than $143,000 $143,000 or more
Married Filing Separately 2024 N/A Less than $10,000 $10,000 or more
Single/Head of Household, or married filing separately and you did not live with your spouse at any time during the year 2023 $73,000 or less More than $73,000, but less than $83,000 $83,000 or more
Married Filing Jointly or qualifying widow(er) 2023 $116,000 or less More than $116,000, but less than $136,000 $136,000 or more
Married Filing Separately 2023 N/A Less than $10,000 $10,000 or more


Combined Modified Adjusted Gross Income

If you are not covered by a retirement plan at work but your spouse is, these deduction ranges apply to you:

Tax year Full deduction Partial deduction No deduction
2024 $230,000 or less More than $230,000, but less than $240,000 $240,000 or more
2023 $218,000 or less More than $218,000, but less than $228,000 $228,000 or more


Note: If you are married filing separately with a spouse who is covered by a plan at work, partial deduction is available if the MAGI is less than $10,000 and no deduction if the MAGI is $10,000 or more. For other filing status, including married filing jointly or separately with you and your spouse not covered by a retirement plan, full deduction is available up to the contribution limit.

Distributions may be taken at any age — in specific amounts, as a lump sum, or as a series of systematic payments. Distributions are taxed at ordinary income tax rates for the year the distribution was made. Distributions taken before age 59½ are generally subject to the 10% tax penalty. You are required to start taking Required Minimum Distributions (RMD) from your Traditional IRA by April 1 of the year following reaching 73 years of age.

In general, you have 60 days from the date you receive an IRA or retirement plan distributions to roll it over to another eligible plan or IRA.

You may make only one IRA tax-free rollover in a rolling 12-month period, regardless of the number of IRAs you own. This includes traditional, Roth, SEP, and SIMPLE IRAs.

The following transactions are not subject to the one rollover per 12-month limitation:

  • IRA to IRA transfers
  • Rollovers made from or to an employer retirement plan (i.e. 401(k) to an IRA or IRA to a 401(k))
  • Conversions (i.e. funds from traditional IRA moved directly or within 60 days to Roth IRA)

For educational purposes only.

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