IRA Center
This is the internet’s source for information on Retirement Accounts
for beginners and professionals. The following information covers traditional IRAs, roth IRAs, 401(k)s, 401(k)
rollovers, SIMPLE IRAs, SEP IRAs, 403(b)s, SARSEPs, Keoghs, Pension Plans. Do you participate in a retirement plan
through your employer? You may be illegible to start a Traditional or Roth IRA as well.
TRADITIONAL IRA
Introduction:
The traditional IRA is the original IRA sometimes referred to as the ordinary or regular IRA. A traditional
IRA is any IRA that is not a Roth IRA, a SIMPLE IRA, or an education IRA. Two advantages of a traditional IRA are
that you may be able to deduct some or all of your contributions to it, depending on your circumstances, and, generally,
amounts in your IRA including earnings and gains, are not taxed until they are distributed, withdrawn. The maximum
allowable contribution is currently $2,000 per year per individual. Click
here to determine your contribution limits and how much of your contribution is deductible.
Who Can Set Up a Traditional IRA?
You, your non-working spouse, and even your child can set up and make contributions to a traditional
IRA if you, your spouse-if you file a joint return, or child received taxable compensation during the year and
you were not age 70 1/2 by the end of the year. For any year in which you do not work, contributions cannot
be made to your IRA for that year unless you receive alimony or file a joint return with a spouse who has compensations.
You can have a traditional IRA whether or not you are an active participant in (covered by) any other retirement
plan. However, you may not be able to deduct all of the contributions if you or your spouse are covered by an employer
retirement plan. If you are considered covered by a retirement plan at work, a roth IRA may be a better option
than a traditional IRA if you qualify. Click here
to find out more information on Roth IRAs.
When and How Can a Traditional IRA Be Set Up?
You can set up a traditional IRA at any time. However, the time for making contributions for any
year is limited.
You can set up different kinds of IRAs with a variety of organizations. You can set up an IRA at a bank or
other financial institution or with a mutual fund or life insurance company. You can also set up an IRA through
your stockbroker. Any IRA must meet Internal Revenue Code requirements.
Kinds of traditional IRAs.
Your traditional IRA can be an individual retirement account or annuity. It can be part of either
a simplified employee pension (SEP) or a part of an employer or employee association trust account.
Individual Retirement Account:
An individual retirement account is trust or custodial account set up in the United States for the exclusive
benefit of you or your beneficiaries. The account is created by a written document. The document must
show that the account meets specific Internal Revenue Code requirements.
To set up an IRA Click Here |
