What is a Traditional IRA?
A Traditional IRA is one of the most common retirement savings accounts. It allows you to take a tax deduction equivalent to the contributions made into the account each year (subject to government guidelines). The investment income accrued on assets within a Traditional IRA account is also excluded from your annual taxable income. There is no tax liability on the funds held within the account. Only when the funds are withdrawn from the account will there be a potential tax liability.
Call With Any Question
Affordable | Professional | Quick Setup
20,000 Clients and $3 Billion in Custody
We Can Help You Too!
Traditional IRA Advantages
The primary advantage of a Traditional IRA account is the tax savings. As long as you don’t exceed the annual limits and follow the government guidelines, your retirement savings placed in the Traditional IRA are deductible from your taxable income. When it comes time to withdraw the funds during your retirement years, most individuals find themselves in a much lower tax bracket than they were while they were employed. This means that they pay a lower tax rate on those funds than they would have during the years they were placed in the account.
Traditional IRA Disadvantages
There are eligibility requirements which must be followed in order to maintain the tax-deferred status of the Traditional IRA account and which determines how much an individual can contribute tax-free each year. It is important to understand how these requirements affect your eligibility each year as your life situation changes.
Poor Shelter for Asset Gains
Since you must pay taxes on the amounts withdrawn from a Traditional IRA account, this means you will also be paying taxes on the income generated from your investments, as well as your contributions, as you withdraw. In some cases, where an account has made significant gains, a Roth IRA, which taxes contributions but not the withdrawals, may provide a better tax advantage.
Age Requirements for Distribution
Traditional IRAs have a minimum age requirement for withdrawals to begin. Withdrawals prior to the minimum age of 59½ will be assessed an early distribution penalty by the IRS. At the same time, you MUST begin receiving distributions at the age of 70½, and those amounts must meet specific criteria to avoid penalties being assessed by the IRS.
“Provident Trust Group has grown to over 20,000 clients with over $3 Billion in assets currently in custody. Both internationally and across the U.S., clients and their teams of financial advisors have chosen to place their confidence in us for their investment holdings.”
The Provident Trust Group Advantage
Provident does not sell products; we provide services to our clients. We are not affiliated with any bank or financial institution. Provident is owned and operated by a team of tax attorneys and highly qualified professionals. Providing personalized, timely service to our clients is our highest priority.
Complex Transactions Simplified
The Provident approach focuses on simplifying the complex. We make sure that every IRS recording and reporting requirement is met and that our clients fully understand what their options and limitations are in regard to their retirement savings accounts.
All it takes is a phone call, to begin your relationship with the professionals at Provident Trust Group, though we’d be happy to meet you in person at our Las Vegas office as well.
Give us a call at (888) 855-9856. We’d be happy to answer your questions related to retirement savings and investments through a Self-Directed Traditional IRA, or any other options that you are considering.