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Definition of the Week: Traditional IRA

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Traditional IRA

What is a Traditional IRA? Behind only the Roth IRA, the Traditional IRA is second most popular type of Individual Retirement Account. The Traditional IRA was created in 1975. The single biggest benefit to the Traditional IRA is that it is generally tax-deductible. Earnings grow tax-deferred inside the Traditional IRA, which isn’t as helpful as the Roth IRA’s tax-free earnings growth, but it is still a solid benefit.

Stockbrokers.com Explains a Traditional IRA:

The Traditional IRA has a few different rules than the Roth IRA. In a Traditional IRA withdraws can be made beginning at age 59.5, and withdraws are mandatory by the age of 70.5. The Traditional IRA does not have income restrictions, which means it is available to everyone who is not an active participant in an employer sponsored plan. The Traditional IRA offers the investor a solid way of saving up money for retirement while receiving some impressive tax benefits.

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