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A traditional IRA is an individual retirement arrangement (IRA), established in the United States by the Employee Retirement Income Security Act of 1974 (ERISA) (Pub. L. 93–406, 88 Stat. 829, enacted September 2, 1974, codified in part at 29 U.S.C. ch. 18). Normal IRAs also existed before ERISA.
There are several types of IRAs: Traditional IRA – Contributions are mostly tax-deductible (often simplified as "money is deposited before tax" or "contributions are made with pre-tax assets"), no transactions within the IRA are taxed, and withdrawals in retirement are taxed as income (except for those portions of the withdrawal corresponding to contributions that were not deducted).
Traditional IRAs offer the potential for tax deductibility in the present, while Roth IRAs are made with after-tax dollars (meaning there is no benefit in the here-and-now).
Roth IRAs have the same contribution limits as traditional IRAs: up to $6,000 or $7,000 — for those 50 and over — in 2022, and $6,500 or $7,500 in 2023. However, some restrictions limit ...
Many American households have an IRA. As of 2023, 41.1 million US households owned about $15.5 trillion in individual retirement accounts, with traditional IRAs accounting for the largest share of ...
However, this can also mean greater risk, as is often the case when choosing alternative investments. ... Traditional IRAs and self-directed IRAs both have advantages, and which one is a better ...