Traditional IRA

Traditional Individual Retirement Accounts are special tax-deferred investment accounts created by the federal government to encourage Americans to save money for their retirement years and other important financial goals. Taxpayers have tax deductible and non-tax deductible options.

	Traditional IRA - Deductible	Traditional IRA - Non-Deductible
Tax Benefits	Tax deductible contributions and tax-deferred earnings	Tax-deferred earnings
Eligibility	Individual with earned income (and non-working spouse) under age 70½, subject to income limits below.	Individual with earned income (and non-working spouse) under age 70½, regardless of plan participation status or income.

Deduction of Contributions (2014)	Individual and/or spouse NOT covered by plan at work Full deduction regardless of income. Individual and/or spouse covered by plan at work, deduction limits for Modified Adjusted Gross Income (MAGI): Single or Head of Household: Up to $60,000 = Full deduction. More than $60,000 and less than $70,000 = Partial deduction More than $70,000 = No deduction Married Filing Jointly or Qualifying Widow(er): Up to $96,000 = Full deduction More than $96,000 and less than $116,000 = Partial deduction More than $116,000 = No deduction Married Filing Separately: : Up to $10,000 = Partial deduction More than $10,000 = No deduction If one spouse is covered by a retirement plan at work and one spouse is not covered by an employer sponsored plan (401(k), 403(b), SEP IRA, SIMPLE IRA, etc), the spouse without a plan has deduction limits for the following Modified Adjusted Gross Income (MAGI): Married Filing Jointly: Up to $181,000 = Full deduction More than $181,000 and less than $191,000 = Partial deduction More than $191,000 = No deduction If an individual did not live with their spouse at any time during the year, their filing status is considered as single for this purpose.	Contributions are not deductible
Basic Annual Contributions (2014)	Lesser of 100% of earned income or $5,500 (for each spouse). Aggregated with Roth IRA contributions.	Same
Catch-Up Contributions (2014)	IRA holders age 50 or older may contribute an addiitional $1,000 (for each spouse) or 100% or earned income, whichever is less. Aggregated with Roth IRA contributions.	Same
Contribution Deadline	May be established and contributions may be accepted for a particular tax year until the due date for filing the individual's federal tax return --no extensions. When the due date for any act for tax purposes --filing a return, paying taxes, etc. -- falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day.	Same
Rollover Contributions	Eligible distributions from another Traditional IRA, SEP IRA, or (after 2 years) SIMPLE IRA, 401(k), government 457 plans, 403(b). No taxes until distribution taken from IRA.	Same
Mandatory Distributions	Age 70½ or death.	Same
Taxes on Distributions	Ordinary income. 10% penalty before age 59½ unless due to death, disability, substantially equal periodic payments (SEPP), eligible medical expenses, certain unemployed individual's health insurance premium's, qualified "first-time" homebuyer ($10,000 lifetime max), qualified higher education expenses, Roth conversion, qualified reservist, or IRS levy.	Each distribution partially taxable and partially tax free according to the Pro Rata Rule Ordinary income on taxable portion. Taxable amounts subject to same 10% penalty tax and exceptions as deductible IRA.