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Traditional IRA
A Traditional Individual Retirement Account (IRA) is one of the most common types of retirement savings accounts. It is a great way to increase the amount you are saving for retirement.
Income within the account grows tax-deferred. Only when the funds are withdrawn from the account as a distribution will there be a potential tax liability.
Better yet, contributions made into the account each year may provide a tax-deduction equivalent to the same amount contributed (subject to government guidelines and income limitations). At the time of retirement, 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.
TAX-DEFERRED
One of the most notable benefits of a Traditional IRA is the fact that funds are tax-deferred while in the account. That means that any gains are also tax-deferred until withdrawn from the account.
TAX DEDUCTIBLE
Contributions to a Traditional IRA may be tax deductible, provided you meet certain requirements.
REQUIRED DISTRIBUTIONS
Another important factor when considering Traditional IRAs is the Required Minimum Distribution requirement when you turn age 72.
DISTRIBUTION PENALTIES
Keep in mind that distributions from your IRA can be subject to a 10% early distribution penalty tax if you are under age 59 1/2, unless a penalty tax exception applies.
CATCH-UP CONTRIBUTIONS
There is a “catch-up” period of which you may contribute $1,000 more to your account. This is only permissible if the account owner is age 50 or older.
FIRST TIME HOME BUYER
Up to $10,000 can be withdrawn from a Traditional IRA penalty-free, if the money is used to acquire a principal residence for a first-time home buyer. The owner of the home must be the Traditional IRA’s owner, their spouse, or their lineal ancestors and descendants. The individual cannot have owned a home in the previous 24 months.
NOTE: Please visit www.irs.gov for a complete breakdown of the rules and regulations concerning Traditional IRAs. Certain restrictions apply regarding prohibited transactions.
| 2023 | 2022 | |
|---|---|---|
| For Tax Year 2020 | ||
| Contribution Limit | $6,500 | $6,000 |
| Catch-Up Contribution | $1,000 | $1,000 |
| Total Contribution Amount | $7,500 | $7,000 |
TRADITIONAL IRA MAGI LIMITS
| 2023 | 2022 | |
|---|---|---|
| For Tax Year 2020 | ||
| Single Active Participant | $73,000 – $83,000 | $68,000 – $78,000 |
| Married Active Participant (Filing Jointly) | $116,000 – $136,000 | $109,000 – $129,000 |
| Married Active Participant (Filing Separately) | $0 – $10,000 | $0 – $10,000 |
| Nonactive Participant, Married to Active Participant (Filing Jointly) | $218,000 – $228,000 | $204,000 – $214,000 |
This material is provided for general educational and informational purposes only and should not be considered to be legal, tax or investment advice. Provident Trust Group, LLC is a non-discretionary, passive, directed custodian that does not sell or solicit investments and does not provide investment advice or recommendations. Provident Trust Group, LLC is not obligated to review and does not endorse any investment or investment advisor, and individuals are responsible for the investments in their accounts. Consult with a tax and/or financial advisor to determine what may be best for your individual needs.
Frequently Asked Questions
How do your fees differ from other custodians who handle traditional & alternative assets?
Provident Trust Group offers a flat-rate annual fee. This differs from many other alternative asset custodians who may increase your annual fee based on an increase in the number of assets you select, value of your assets, or even the purchase of a different asset class.
Most custodians of traditional assets collect fees and/or commissions based off of the amount of trades or recommendations of investment choices. For our full fee schedule, click here.
Can Provident Trust Group provide tax or legal advice regarding your investment?
What types of investments are prohibited with retirement accounts?
The IRS does not state which investments are permissible in a qualified account or retirement plan, but they do state specific asset classes that are prohibited. The IRS currently prohibits IRAs from investing in Life Insurance, Collectibles and S-Corps. Some examples of collectibles, include:
- Artwork,
- Rugs,
- Antiques,
- Metals – with exceptions for certain kinds of bullion,
- Gems,
- Stamps,
- Coins – (but there are exceptions for certain coins),
- Alcoholic beverages, and
- Certain other tangible personal property.
For more information, click here for the IRS Website.
Can my account invest with other partners, including myself?
Not Sure What Plan Is Right For You?
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The Provident Advantage
Our approach focuses on delivering clear and concise information so you can make well-informed decisions regarding your investments. Our clients rely on our abilities to ensure every administrative and reporting detail is covered and completed on time.
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Record Keeping
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Alternative Asset Custody
Rollover Assistance
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Contribution Processing
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