Traditional IRAs offer two large incentives to encourage retirement savings. First, Traditional IRA contributions may be tax-deductible on an IRA holder's tax return. Consult your tax advisor to find out if you qualify for the deduction. Second, earnings on a Traditional IRA are not taxed until the IRA holder takes the money out. Traditional IRA holders are not required to withdraw the funds until they reach the age of 70½. If contributions are made to both Traditional and Roth IRAs, the maximum contribution to the Traditional is reduced by the amount contributed to the Roth.
Contribution amounts and catch-up contribution amounts will increase annually as follows:
