What Is Traditional IRA?
A retirement account funded with pre-tax dollars that defers taxes until withdrawal in retirement.
Definition
A Traditional IRA is funded with pre-tax dollars (deductible if you do not have a workplace plan and meet income limits). Money grows tax-deferred. Withdrawals after 59½ are taxed as ordinary income. Required Minimum Distributions (RMDs) start at age 73. Traditional IRA makes sense if you expect a lower tax bracket in retirement than today, or you want the immediate tax deduction. 2026 contribution limit: $7,000 ($8,000 if 50+).
Example
Contributing $7,000 in a 24% bracket saves $1,680 on this year's taxes. Pay tax later when withdrawing.
Use It
Try the Retirement CalculatorRelated Terms
Roth IRAA retirement account funded with post-tax dollars that grows and withdraws tax-free in retirement.401(k)A US employer-sponsored retirement plan with tax advantages and often an employer match.Marginal Tax RateThe tax rate applied to your last (highest) dollar of income, not your entire income.