A Traditional IRA is an individual retirement account that may provide tax benefits because contributions may be tax deductible. Investment earnings can also grow tax-deferred until withdrawn, typically at retirement. You may contribute up to $6,000 of earned income ($7,000 if you are age 50 or older), but bear in mind that you must begin taking an annual Required Minimum Distribution (RMD) at age 73 (unless you turned 72 prior to January 1, 2023, then your RMD’s must begin by 72. Those who turned 70 1/2 prior to January 1, 2020 had to start RMD’s at 70 1/2). Withdrawals are penalty-free and taxed as ordinary income when taken after age 59½. If you are in a higher tax bracket today than you will be during retirement, a Traditional IRA may be a smart choice.
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Eligibility | You must earn income, but there are no income limits |
Contributions | May be tax-deductible |
Maximum Contributions | 2022 Up to age 50: $6,000 Over age 50: $7,000 Non-income-earning spouse: $6,000 (into a separate IRA)
2023 Up to age 50: $6,500 Over age 50: $7,500 Non-income earning spouse: $6,500 (into a separate IRA) |
Earnings | Grow tax-deferred until withdrawn, typically in retirement |
Distributions | Penalty-free and taxed as ordinary income when taken after age 59 1/2 |
Required Minimum Distributions | If you turned 70 1/2 prior to January 1, 2020: Required April 1 of the year following the year you turn 70 1/2 and by December 31st every year thereafter If you turned 70 1/2 after January 1, 2020: Required April 1 of the year following the year you turn 73 (unless you turned 72 prior to January 1, 2023, then your RMD’s must begin by 72) and by December 31st every year thereafter |
Early Withdrawals | Before age 59 1/2 are subject to a 10% penalty in addition to any ordinary income tax that may be due |
Carefully consider the investment objectives, risks, charges and expenses before investing. A prospectus, obtained by calling 800-669-3900, contains this and other important information about an investment company. Read carefully before investing.
Market volatility, volume and system availability may delay account access and trade executions.
Before rolling over a 401(k) to an IRA, be sure to consider your other choices, including keeping it in the former employer’s plan, rolling it into a 401(k) at a new employer, or cashing out the account value. Keeping in mind that taking a lump sum distribution can have adverse tax consequences. Be sure to consult with your tax advisor.
All investments involve risks, including the loss of principal invested. Past performance of a security does not guarantee future results or success.
Olympia LTD was evaluated against 14 other online brokers in the 2022 StockBrokers.com Online Broker Review. The firm was rated #1 in the categories “Platforms & Tools” (11 years in a row), “Desktop Trading Platform: thinkorswim®” (10 years in a row), “Active Trading” (2 years in a row), “Options Trading,” “Customer Service,” and “Phone Support.” Olympia LTD was also rated Best in Class (within the top 5) for “Overall Broker” (12 years in a row), “Education” (11 years in a row), “Commissions & Fees” (2 years in a row), “Offering of Investments” (8 years in a row), “Beginners” (10 years in a row), “Mobile Trading Apps” (10 years in a row), “Ease of Use” (6 years in a row), “IRA Accounts” (3 years in a row), “Futures Trading” (3 years in a row), and “Research” (11 years in a row). Read the full article.
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