A traditional IRA is a personal retirement account that often allows tax-deductible contributions and lets investments grow tax-deferred. You generally pay ordinary income tax when you withdraw, and required minimum distributions begin at the age set by current IRS rules.
IRAs can hold a range of products, including annuities. Withdrawals of taxable amounts before age 59½ may face an additional IRS penalty.
Example
A worker rolls an old 401(k) into a traditional IRA to consolidate accounts and gain more control over how the money is positioned for retirement income.
This definition is for general educational purposes only and is not financial, tax, or legal advice. Tim Hartle is an independent insurance professional. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company and are not FDIC insured. Rules and product features vary by situation and by state. Please consult a qualified advisor about your own circumstances.