A Traditional IRA allows your investment earnings to grow tax-deferred until withdrawn, typically at retirement.
Generally, if you have earned income or receive alimony, you can establish IRA accounts prior to the tax year in which you reach age 70½. Your retirement savings plan IRA may be deductible on your income tax return, depending on your income and your eligibility for an employer-sponsored retirement plan.
The current maximum contribution to a Traditional IRA is $6,000 with an additional Catch-Up contribution of $1000 if you are at least 50 years of age for a total of $7,000 after age 50.
Additionally, at 72, you must begin taking an annual Required Minimum Distribution (RMD), the amount of which depends on rules set by the IRS. Traditional IRAs offer two distinct advantages in terms of taxes: potential deductibility of contributions and tax deferral on investment earnings.
If you file a joint return, you may be able to contribute to an IRA, even if you did not have taxable compensation, as long as your spouse did. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return. If neither spouse participated in a retirement plan at work, all of your contributions will be deductible.
Can I contribute to an IRA if I participate in a retirement plan at work?
You can contribute to a traditional or Roth IRA whether or not you participate in another retirement savings plan through your employer or business. However, you might not be able to deduct all of your traditional IRA contributions if you or your spouse participates in another retirement plan at work. Roth IRA contributions might be limited if your income exceeds a certain level.
For more information, click here (IRS)