With a Traditional IRA, you make contributions with money you may be able to deduct on your tax return. Any earnings potentially grow tax-deferred until you withdraw them in retirement.
Contributions
Tax-deductible contributions1
Earnings
Any earnings grow federal income tax-deferred
Withdrawals
10% early withdrawal penalty may apply for other withdrawals taken prior to age 59½, if no exceptions apply
Penalty-free withdrawals allowed for first home purchase and certain college expenses
Minimum required distributions (MRDs) starting at age 70½
Eligibility1
Individuals less than 70½ years of age
Must have employment compensation
Maximum contribution
2013 and 2014: $5,500 ($6,500 if age 50 or older)
Traditional IRA modified adjusted gross income (MAGI) phase-out ranges
These are the income ranges in which you are eligible to partially deduct a contribution to a Traditional IRA.
| 2013 | 2014 | |
|---|---|---|
| Single individuals | $59,000 - $69,000 | $60,000 - $70,000 |
| Married, filing joint tax returns | $95,000 - $115,000 | $96,000 - $116,000 |
| Married, filing separately | $0 - $10,000 | $0 - $10,000 |
| Non-active participant spouse (i.e., spouses earning no income) | $178,000 - $188,000 | $181,000 - $191,000 |
*Note: We recommend that you talk to your accountant about how these ranges apply to your particular situation.
1 – It is important to talk to your accountant to determine how a Traditional IRA can be applied to your situation.
