Traditional IRA

The Traditional IRA allows you to take advantage of federal income tax deferred earnings and possible yearly tax deductions. This type of IRA can help you pay less in taxes now, using pre-tax dollars to build principal for more earnings later. Everyone under age 70½ with earned income may participate in a Traditional IRA; however, income and other limitations determine eligibility for tax deductions.

Key Features

Traditional IRA contributions are generally tax deductible, reducing today's tax liability, and the contributions and related earnings are federal income tax-deferred until distribution.

Distributions from a Traditional IRA may begin at age 59½ and are required to begin at age 70½. Distributions taken prior to age 59½ may be subject to a 10% IRS early withdrawal penalty, unless one of the following exceptions exists:

• Purchase of a first home ($10,000 lifetime limit)
• Qualified higher education expenses
• Disability
• Death
• Substantially Equal Period Payments (early retirement)
• Medical exceptions

The deductible contributions and earnings are always subject to federal income tax at time of distribution. Consult your tax advisor about eligibility requirements.

How Much You Can Contribute

The most that an individual can be contribute to a Traditional IRA is $5,000 ($6,000 if you are age 50 or older). For married couples filing jointly, combined total contributions can be as much as $10,000 ($11,000 if only one of you is age 50 or older or $12,000 if both of you are age 50 or older).

You can contribute to both a Traditional IRA and a Roth IRA in the same year; however, the total contribution is limited to $5,000 ($6,000 if you are age 50 or older) for individuals and $10,000 ($11,000 if only one of you is age 50 or older or $12,000 if both of you are age 50 or older) for joint filers.

Important note:   The IRA features described are for informational purposes only and are subject to change. Advice from a tax advisor or legal counsel is recommended. To open an IRA account, please visit your local branch.