Traditional IRA

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Traditional IRA

A tax-deferred individual retirement account that allows annual contributions of up to $2000 for each income earner. Contributions are fully deductible for all individuals who are not active participants in employer-sponsored plans or for plan participants within certain income ranges.

Traditional IRA

An investment retirement account in which a worker makes tax deductible contributions up to a certain limit throughout his/her working life. Unlike Roth IRAs, contributions are tax deductible but withdrawals are taxed, effectively deferring tax on the account until the worker begins making withdrawals in retirement. Importantly, however, tax deductibility of contributions depends on one's tax bracket. The limit to annual contributions varies by year and is indexed to inflation. Traditional IRAs are allowed to invest in securities and, in practice, normally own common stock and certificates of deposit. See also: 401(k).
References in periodicals archive ?
It is important to note that those with both deductible IRAs and nondeductible IRAs cannot choose to roll over only the nondeductible amounts.
Tax-deferred accounts include deductible IRAs and 401(k) type accounts.
Among the federal income tax changes explained in the Special Report are: -- A new private mortgage insurance (PMI) deduction for homeowners -- Higher personal and dependency exemptions -- Higher income limits for deductible IRAs and Roth IRAs -- Increased Section 179 expense deduction for business owners -- Bigger health care deductions -- Increased contribution limits for 401(k) plans --Tax relief for foreclosures
Federal deficits, public policy on Social Security, allowing deductible IRAs or closing those "loopholes" all have an effect.
Includes defined-contribution plans, profit-sharing plans, 401(k) plans, 403(b) plans, 457 plans, Keogh plans, Simplified Employee Plans (SEPs), SIMPLE plans and deductible IRAs.
For example, it increases the maximum income phase-out levels for deductible IRAs to between $80,000 and $100,000 of AGI for joint filers and $50,000 to $60,000 for single filers.
Perhaps these excess funds can be used for deductible IRAs, stock options, Sec.
In addition to accelerating the IRA limit to an immediate $5,000, the legislation will speed the gradual increases in income eligibility for traditional deductible IRAs enacted as part of the 1997 taxpayer relief act.
As deductible IRAs, the tax basis is zero since contributions were deducted in arriving at AGI.
With these accounts (which should be kept separate from any deductible IRAs you may have), you can't deduct the contribution, but the growth continues to be deferred from taxes until you withdraw the money.
For deductible IRAs contribution amounts and their earnings, as well as earnings on nondeductible contributions, are included in the taxpayer's gross income.