What is a Traditional IRA?
LP
Len Perroots
Updated 5 months ago
A traditional IRA, or Individual Retirement Account, is a type of retirement savings account that allows you to save money for your retirement in a tax-advantaged way. The beauty of a traditional IRA is that it often allows your contributions to be tax-deductible in the year they are made, which can lower your taxable income. The funds within the account grow tax-deferred, meaning you won't pay taxes on the earnings until you withdraw them, typically after you retire. Withdrawals after retirement are taxed at your current income tax rate at that time, which could be lower than your tax rate during your working years. It's a fantastic tool for anyone looking to secure their financial future while benefiting from potential tax breaks today. Remember, there are annual contribution limits and rules around withdrawals before retirement age, so it's always a good idea to consult with a financial advisor to make the most out of your IRA.
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