Is The Traditional IRA Right For Me?

Setting aside money each year into an IRA is a great way to supplement your other retirement savings. With a Traditional IRA, you pay no tax on your earnings until you withdraw them at retirement, when you may be in a lower tax bracket.

You should consider a Traditional IRA if:

• You are eligible to deduct your contribution and you anticipate your tax rate at the time of withdrawal will be lower than your current tax rate.


• If your income is over $95,000 (single) or $160,000 (joint), since you are not eligible to make a full Roth IRA contribution.

But the single biggest reason investors choose a Traditional IRA over a Roth IRA is the opportunity for some investors to take a tax deduction on the IRA contribution, which may lower your current tax bill. (Some investors, however, still contribute to a Traditional IRA even without the tax deductions).

You can deduct your Traditional IRA contribution if:

• Neither you nor your spouse participates in an employer-sponsored retirement plan.


• You alone do not participate in an employer-sponsored plan and your AGI (Adjusted Gross Income) is less than $150,000.


• Your Adjusted Gross Income is less than the income limits that apply for the tax year, regardless of whether you’re in a retirement plan at work.