Traditional IRA

A traditional IRA offers you the ability to earn tax-deferred interest on your money. Most Americans can deduct all or part of their IRA contribution from their current taxable income. The deductible amount depends on your income, marital status, and whether you are an active participant in an employer-sponsored plan as defined by the Internal Revenue Service. A traditional IRA enables you to defer taxes until you retire, at which time you may likely be in a lower tax bracket. Distributions are generally taxable but there are allowances for penalty-free withdrawals under certain circumstances. Withdrawals are permitted beginning at age 59 1/2 and are required at age 70 1/2.