Intro to Traditional IRAs
The Traditional IRA has been a popular retirement plan since it hit the scene in 1974. That’s when the government signed it into law because it didn’t look like people were going to have enough money to support themselves during retirement.
Traditional IRAs are pretty straightforward – it’s a personal retirement plan that lets you grow money tax-deferred. Even better, if you meet income requirements, your contributions are generally tax deductible, which may mean a lower tax bill.
Even if you make too much money to qualify for the tax deduction, you can probably still contribute to a Traditional IRA. While you won’t get the tax deduction on the contribution, your earnings have the potential to grow tax-deferred.
Now is the time to take control of your future retirement. All it takes is a call to a COUNTRY Financial® representative.
How It Works
Retirement plans can be complicated, but Traditional IRA rules are pretty straightforward. Here are some of the most significant rules.
Contributing to a Traditional IRA
To qualify to make contributions, you have to have earned income and be under 70 ½. To get a tax deduction, your Modified Adjusted Gross Income (MAGI) has to fall within these limits:
The IRS limits how much you can contribute each year to your Traditional IRA. You don’t have to contribute that much, though, and you don’t even have to contribute every year.
Taking the money out
When it’s time to withdraw the money, there are a few rules you should know about:
- If your contributions were tax-deductible, you’ll have to pay ordinary income taxes when you take a distribution of those contributions. You'll also pay ordinary income tax on any earnings.
- At 70 ½ you have to start taking some of the money out – known as Required Minimum Distributions . If you don’t, there’s a substantial penalty.
- You don’t have to wait that long, though. You can start withdrawing the money as early as 59 ½ without penalties.
- Withdrawing money before age 59 ½ will result in a 10% penalty. There are some exceptions to this rule, though. The money can be withdrawn penalty-free for: disability, certain medical bills, first home purchase ($10,000 lifetime limit), health insurance premiums during unemployment of 12 weeks or more, qualifying educational expenses or distributions to your beneficiaries because of your death.
What's in it for you?
There are a lot of Traditional IRA benefits. The biggest perks are:
You may get tax deductions for contributions and a lower tax bill.
Growth is tax-deferred.
You’re actively doing something for your future retirement.
You’ll get those benefits no matter where you have your IRA because the IRA itself has the same general rules at every financial institution. It’s simply an account where you put your money.
What sets IRAs apart are the investments you put in them. We think you’ll be impressed with the Traditional IRA options COUNTRY Financial has to offer you.
When it comes to funding your Traditional IRA, it's good to have options. We'll help you select what makes the most sense for you. Some choices we offer:
Select your own investments
Including funds from well-known mutual fund families. If you’re the type who wants to pick and choose your own investments, this could be a good choice for you.
Fund your IRA with an annuity
For lifetime income.
Choose professional investment management
Our investment pros invest the money for you so you don't have to worry about it.
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Investment management, retirement, trust and planning services provided by COUNTRY Trust Bank®. Please see our Terms & Conditions for more information about COUNTRY Trust Bank and its affiliates.
Annuities issued by COUNTRY Investors Life Assurance Company®, Bloomington, IL. Funding your IRA with an annuity does not offer additional tax benefits.
COUNTRY Financial and our representatives cannot give legal or tax advice. Please consult tax and legal counsel of your choice regarding your personal circumstances.