What is a Traditional IRA?

08/30/2011 0 comments

A traditional IRA is a tax-deferred retirement savings account. You will not pay taxes on any capital gains, dividends and interest payments in your account until you start to withdraw your money. This allows an IRA to grow much faster than a taxable account.

Traditional IRAs can be funded by pre-tax or after-tax money. Whether you qualify for a full or partial tax deduction depends mostly on your income and whether you have access to a work-related retirement account like a 401(k).

A typical traditional IRA account is a brokerage account. Most people open their IRA accounts through discount online brokerages.

You can also rollover your old 401(k) retirement account to an IRA account.



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