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.
Individual and/or spouse NOT covered by plan at work
Individual and/or spouse covered by plan at work, deduction limits for Modified Adjusted Gross Income (MAGI):
Single or Head of Household:
Married Filing Jointly or Qualifying Widow(er):
Married Filing Separately: **:
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:
** 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.
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.