IRA

Traditional IRA

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.

 

Tax advantages

Contributions Tax-deductible contributions
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 for first home purchase and certain college expenses

Minimum required distributions (MRDs) starting at age 70½

Account features

Eligibility Individuals less than 70½ years of age

Must have employment compensation

Maximum contribution 2012: $5,000 ($6,000 if age 50 or older)

2013: $5,500 ($6,500 if age 50 or older)

Investment options A wide range of mutual funds, stocks, bonds, ETFs

 

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