Traditional IRA contributions are tax-deductible up to income limits, and growth is tax-deferred. Withdrawals in retirement are taxed as ordinary income. Required minimum distributions (RMDs) begin at age 73 in the US.
Traditional generally wins when you expect a lower tax rate in retirement than today — common for higher-income earners later in career.
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Open Financial OS →Frequently asked questions
Is a Traditional IRA deductible for everyone?
Deductibility phases out at higher incomes if you (or a spouse) are covered by a workplace retirement plan. Non-deductible contributions are still allowed.
Related terms
Roth IRA
A US retirement account funded with after-tax dollars, with tax-free growth and tax-free qualified withdrawals.
IRA (individual retirement account)
A US tax-advantaged retirement account you open on your own, separate from an employer plan.
Tax-advantaged account
An account that lets investments grow with reduced or deferred tax.
Retirement
The stage of life when you have enough savings and income to make paid work optional.