A traditional IRA is a tax-deferred account designed specifically for retirement savings. Anyone under the age of 70½ who has earned income may establish and contribute up to $5,500 or $6,500 if you are 50 years of age or older, for 2015.
To provide individuals with an account into which they may contribute dollars that may be used for retirement.
Traditional IRAs are suited for all investors under age 70½ with earned income who are able to set aside dollars for retirement.
- Tax Deferral – Contributions grow tax-deferred until removed.
- Traditional IRAs can be converted to a Roth IRA and allow for tax-free growth. Learn more about the IRA Conversion.
- Increased Savings – IRAs may reduce dependence on Social Security.
- Flexibility – Contributions can be invested to meet personal objectives. You can choose from a variety of investments including CDs, stocks, bonds and mutual funds.
- Penalty for Early Withdrawal – Distributions taken prior to age 59½ will be subject to a 10% penalty unless the distribution is due to death or disability; college expenses; first-time home purchase up to $10,000; payment of health insurance premiums after 12 consecutive weeks of unemployment; payment of medical expenses that exceed 7.5% of modified adjusted gross income (MAGI); systematic distributions [72(t)]; IRS levy; or qualified reservist distribution.
- Required Minimum Distribution (RMD) – Mandatory distributions are required at age 70½. If you consolidate your IRAs at Edward Jones, we can calculate this amount automatically.
- Possible Tax Deductions – Your contributions may be tax-deductible depending on whether you participate in an employer sponsored retirement plan. If you are single and not covered by a plan, or if you are married and neither you nor your spouse is covered by a plan, you can deduct your full contribution. If you or your spouse is covered by a plan through work, deductibility depends on your MAGI.
For more information about IRAs, please contact your local financial advisor.
All tables show information for the 2015 tax year. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. Please consult your attorney or qualified tax advisor regarding your situation.