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 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 72. 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 While the money is taxed when withdrawn, often owners are in a lower tax bracket at that point in their life.
IRA Eligibility
You can set up and make contributions to a Traditional IRA if you (or your spouse, if you file jointly) have earned income.*
If both you and your spouse have compensation, each of you can set up an IRA. You cannot participate in the same IRA.
When an IRA is referred to as a self-directed account, it simply means you can use the account invest in areas outside of the traditional stocks and bonds. That’s the primary difference between a self-directed and traditional retirement account — where you put those investment dollars.
Private debt like corporate debt offerings, notes secured by deeds of trust or mortgages
Private equity-like stock of C-corporations, limited partnerships, LLCs and REITs
Precious metals, including gold, silver, platinum, and palladium
Cryptocurrency like Bitcoin
*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.
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