What is a Traditional IRA?
A Traditional Individual Retirement Account (IRA) allows a client to invest in stocks, bonds, mutual funds, certificates of deposit, ETFs index funds etc. using pre-tax dollars.
That means the client does not pay income taxes on the money they are using to invest until they withdraw the money from the account. The minimum age to withdraw money from a Traditional IRA is 59 ½ years old.
In retirement, the client will pay income taxes on the amount they are withdrawing at their ordinary tax rate.
With Traditional IRAs, the IRS requires people begin taking Required Minimum Distributions (RMDs) from their account beginning at age 70 ½.
Traditional IRAs (and Roth IRAs) have yearly contribution limits of $5,500 ($6,500 for people over the age of 50).
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