Traditional IRA

What is a Traditional IRA?
You are eligible to contribute to a Traditional IRA is you earn compensation or file a joint tax return with a spouse who earns compensation.  Starting with the 2020 tax year, you may make a contribution at any age.

How much can I contribute?
You can contribute up to $6,000 for 2019 and for 2020, or $7,000 if you are age 50 or older.  Contributions cannot exceed your annual compensation.

Can I take an income tax deduction for my contribution?
Whether your Traditional IRA contribution is deductible on your federal income tax return depends on your marital and tax-filing status and whether you or your spouse actively participate in an employer-sponsored retirement plan.  If neither of you is an active participant, you are eligible to deduct your full contribution.  Otherwise, you’ll need to refer to the MAGI limits for deductibility to determine how much can be deducted.

What is MAGI?
MAGI is your adjusted gross income before a Traditional IRA deduction (and certain other limited deductions or adjustments to income) are made.  MAGI limits are subject to annual cost-of-living adjustments (COLAs).

The MAGI limits for a Traditional IRA are used to determine if and how much you can deduct.

Tax-Filing Status Active Participation Active Participation Year Full Deduction Allowed Partial Deduction Allowed No Deduction Allowed
Single Yes 2019 $64,000 or less $64,000-$74,000 $74,000 or more
Single Yes 2020 $65,000 or less $65,000-$75,000 $75,000 or more
Married, Filing Jointly Yes 2019 $103,000 or less $103,000-$123,000 $123,000 or more
Married, Filing Jointly Yes 2020 $104,000 or less $104,000-$124,000 $124,000 or more
Married, Filing Jointly No, but spouse is 2019 $193,000 or less $193,000-$203,000 $203,000 or more
Married, Filing Jointly No, but spouse is 2020 $196,000 or less $196,000-$206,000 $206,000 or more

When Can I Withdraw Money?
You may withdraw money from either type of IRA at anytime, subject to federal income tax.  If you are under age 59 1/2, you will also be subject to a 10% early distribution penalty tax on any taxable amount taken, unless you qualify for a penalty exception: death (beneficiary distributions), disability, certain health insurance costs, certain medical expenses, higher education expenses, first-time home buyer expenses, birth of a child or adoption expenses, substantially equal periodic payments, IRS tax levy, qualified military reservist distributions, or qualified disaster-related distributions.

Will I ever be required to withdraw the money?
Yes.  Traditional IRA owners are required to take annual minimum distributions beginning with the year they turn age 72 (or earlier if they turned age 70 1/2 in 2019 or before).  Your beneficiaries also will be subject to required distributions.


*IMPORTANT NOTE- The information contained in this brochure is not intended to provide specific advice or recommendations for any individual. We recommend that you consult your attorney, tax or financial advisor with regard to your personal situation.