Potential for tax-deferred growth
- Use the IRA Selector tool to see if you qualify for a Traditional or a Roth IRA
- All investment earnings are tax-deferred; pay taxes only when distributions are taken
- Make tax-deductible contributions, depending on income2
- Automate your retirement investing with Core Portfolios (low $500 minimum)
- Enjoy fast, easy withdrawals at age 59½ with free cash management features3
(if under age 50)
(if age 50 or older)
Why open a Traditional IRA?
A Traditional IRA may give you a potential tax break because pre-tax contributions lower annual taxable income.
Compare investment accounts to see if a Traditional IRA account is right for you.
Contributions can be made on a pre-tax basis and may be tax-deductible depending on income
No annual IRA fees and no account minimums
Transaction fees, fund expenses, brokerage commissions, and service fees may apply
Benefit of flexibility
Withdraw assets penalty-free at any time for a qualified first time home purchase, qualified higher education costs, or certain major medical expenses4
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What are the eligibility requirements for Traditional IRA?
- Must be 18 years of age or older with earned income
- Must have MAGI (Modified Adjusted Gross Income) under certain thresholds to deduct contributions
- To apply online, you must be a US citizen or resident
- Traditional IRAs must be established by the tax filing deadline (without extensions) for the tax year to which your qualifying contribution(s) will apply. This date is generally April 15 of each year. Applications postmarked by this date will be accepted.
- Participation in an employer-sponsored retirement plan, such as a 401(k), 403(b), or 457 plan, may impact an investor’s ability to deduct Traditional IRA contributions on their taxes. If neither an investor nor their spouse participates in an employer-sponsored plan, they can fully deduct a Traditional IRA contribution on their taxes.
- If an investor does participate in an employer-sponsored retirement plan, and if their MAGI is less than $65,000 in 2020 ($66,000 in 2021), they also may be eligible to deduct their entire contribution. If an investor’s MAGI is between $65,000-$75,000 in 2020 ($66,000-$76,000 in 2021), they may be eligible to deduct a partial contribution. Investors with MAGI of more than $75,000 in 2020 ($76,000 in 2021) are not eligible to deduct a contribution.
- If an investor participates in an employer-sponsored retirement plan, and if their combined MAGI is less than $104,000 in 2020 ($105,000 in 2021), they also may be eligible to deduct their entire contribution. If their combined MAGI is between $104,000-$124,000 in 2020 ($105,000-$125,000 in 2021), they may be eligible to deduct a partial contribution. An investor is not eligible to deduct a contribution if their combined MAGI is more than $124,000 in 2020 ($125,000 in 2021).
- If an investor does not participate in an employer-sponsored plan, but their spouse does, then the income limits are different. If their combined MAGI is less than $196,000 in 2020 ($198,000 in 2021), they may be eligible to deduct their entire contribution. If their combined MAGI is between $196,000-$206,000 in 2020 ($198,000-$208,000 in 2021), they may be eligible to deduct a partial contribution. An investor is not eligible to deduct a contribution if their combined MAGI is more than $206,000 in 2020 ($208,000 in 2021), and their spouse participates in an employer-sponsored plan.
How can an investor contribute to an IRA?
An investor can contribute to an IRA account by transferring funds online from a bank or brokerage account, sending a check, or completing a wire transfer. For more information about ways to make a deposit to an account, see the Help topic, Contribute to an IRA account.
An investor is allowed to contribute 100% of earned income up to the annual contribution limit. View IRA Contribution Limits and Deadlines to learn more.
How can one determine whether a Traditional IRA contribution is tax-deductible?
Determining if an investor can deduct all or part of their Traditional IRA contribution is based on whether they have a retirement plan at work, their tax filing status, and modified adjusted gross income (MAGI). To determine the exact amount of a deductible contribution, use the IRA Selector or view IRA Contribution Limits and Deadlines to learn more.
Can an investor have an IRA even if they contribute to their employer’s 401(k) plan?
This is a common myth about retirement investing. An investor may still contribute to an IRA even if they participate in an employer-sponsored retirement plan. However, they may not be able to deduct a Traditional IRA contribution if they exceed certain income limits. View IRA Contribution Limits and Deadlines to learn more.
Explore similar accounts
Tax-free growth potential retirement investing
Pay no taxes or penalties on qualified distributions if you meet the income limits to qualify for this account.
Take control of an old 401(k)
Consolidate assets from a former employer’s retirement plan.
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