question.jpgIn Federal Income Tax

What is a traditional IRA?

An IRA that allows you to contribute pre-tax dollars if your income limits qualify. Under a traditional IRA, you can contribute up to $4,000 per year, or $4500 if you are over 50. If you are married, both you and your spouse can contribute up to $4,000 to an IRA, even if one spouse does not earn an income. Earnings accumulate tax-free until you begin withdrawing the funds. If you take money out of the traditional IRA before you are 59 1/2 , you will be subject to a penalty. If the IRA loses value because of poor investments, you may not deduct the loss. Withdrawals from a traditional IRA are taxable, except for amounts allocated to nondeductible contributions.