Traditional IRA Explained in 60 Seconds (Tax-Deferred Retirement Account)

Описание: // SUMMARY:

A traditional IRA is simply a US retirement savings vehicle by which investors contribute pre-tax income That money grows tax deferred and the withdrawals later in retirement are taxed as ordinary income whereas an account like A 401K is tied to your employer Anyone with earned income below the limit can open a traditional IRA on their own The main function of the traditional IRA is that contributions are made with pre-tax dollars In most cases they are tax deductible Those contributions are allowed to grow tax deferred and withdrawals later in retirement are taxed as ordinary income Traditional IRAs have what are called required minimum distributions or RMD's This means you have to start withdrawing after age 73 whether or not you actually need that money This is because Uncle Sam wants to collect on his tax revenue that you've avoided up to that point Account holders can start withdrawing without penalty at age 59.5 Withdrawals before that age will incur a 10% penalty plus taxes Also note that you can open a traditional IRA in addition to an employer sponsored plan like a 401k

#investing #retirementaccounts #retirementsavings

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