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Traditional IRA

Is a Traditional IRA right for you?

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 Investment earnings can also grow tax-deferred until withdrawn, typically at retirement.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 72 (or 70½ if you turned 70½ prior to January 1, 2020). 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.

Benefits of a Traditional IRA

  • Contributions to a Traditional IRA may be tax deductible (depending on income level).
  • Earnings can grow federal tax-deferred.
  • Starting in tax year 2020, a Traditional IRA is available to everyone who earns income.

Why open a TD Ameritrade Traditional IRA?

  • Breadth of Investment Choices - Including commission-free ETFs, no-transaction-fee mutual funds1, fixed income products, and much more.
  • Empowering Education - We offer exclusive videos, useful tools, and webcasts to help you create a personalized retirement plan.
  • Smart Tools – Plan and evaluate your retirement strategy with helpful tools like the IRA Selection Tool and Retirement Calculator.
  • Fair and Objective Research - Take control with objective third-party research provided by Morningstar Investment Management, CFRA (formerly S&P Capital IQ), and Market Edge

Traditional IRA Rules

Eligibility

You must earn income, but there are no income limits

Contributions

May be tax-deductible

Maximum Contributions

2020 and 2021

Up to age 50: $6,000

Over age 50: $7,000

Non-income-earning spouse: $6,000 (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Grow tax-deferred until withdrawn, typically in retirement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 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

  • Roth IRA vs. Traditional IRA

     

    Need help deciding between a Roth IRA and a Traditional IRA? Try our IRA Selection Tool or view a comparison chart to find out which IRA is right for you.


  • Considering a Roth IRA conversion

     

    Take advantage of every savings strategy you can. A Roth conversion may help you do that.


  • Keep your old 401k working for you

    You have choices when it comes to managing your old 401k retirement assets. Learn more.

Get in touch Call or visit a branch

Call us: 800-454-9272

175+ Branches Nationwide

Check the background of TD Ameritrade on FINRA's BrokerCheck