2020 IRA Contributions & Deductions Infographic
Infographic summarizing IRS contribution limits and catch up provisions for retirement accountsLEARN MORE
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The Traditional IRA allows you to invest with pre-tax contributions that can compound over time in a tax-deferred environment. Plus, owners may qualify for tax-deductions in addition to yearly contributions.
Anyone who is under the age of 70½ and has compensation* is eligible to make a contribution to a Traditional IRA.
The owner can begin withdrawing from the account at age 59½ (withdrawals before this are subject to penalty and taxes) and is required to take a distribution each year beginning in January after attaining the age of 70½ (you also cannot make any contributions after this age). For more information see IRA Withdrawal Rules.
Grow your retirement account over time tax-deferred, while also possibly qualifying for yearly tax-deductions. While the money is taxed when withdrawn, often owners are in a lower tax bracket at that point in their life.
You can set up and make contributions to a Traditional IRA if you meet BOTH of these requirements:
If both you and your spouse have compensation and are under age 70½, each of you can set up an IRA. You cannot both participate in the same IRA.
*Compensation is defined as the wages, salaries, commissions, bonus, alimony and any other amount that you receive for providing personal services. For individuals who are self-employed, sole proprietors and partners in a partnership, “earned income” is another term for compensation. Passive income such as interest, dividends and most rental income are not considered compensation for the purpose of funding an IRA.
IRA Contribution Limits, Catch Up Provisions and Contribution Deadlines