Traditional IRAs


What to know about traditional IRAs

A traditional Individual Retirement Account (IRA) is a tax-advantaged investment account that allows you to contribute to your retirement. In some cases, you can deduct your contribution from your current income taxes, deferring payment of those taxes until you make a withdrawal from your IRA.

Traditional IRA features

  • You can contribute each year up to the IRS defined limit or 100% of your earned income, whichever is less.
  • Traditional IRAs offer tax-deferred growth and your contributions may be tax-deductible.
  • If you participate in a workplace retirement plan, the ability to deduct your contributions is based on your income (see details under Eligibility).
  • You can begin withdrawing money as early as age 59½ and must begin taking distributions by age 73.
  • You can make catch-up contributions at age 50 and older.

Things to consider

  • Withdrawals are taxable and included with your yearly income.
  • There is a 10% early-withdrawal penalty on distributions taken before age 59½ (some exceptions apply).
  • Required minimum distributions (RMDs) begin at age 73.

Contribution limits

Contribution limits vary based on age, and can change each year as defined by the IRS. Visit the IRS website for details.


Individuals who have earned income — and their spouses, if married filing jointly — can contribute to a traditional IRA. With a traditional IRA, you may be able to deduct your contributions on your taxes. Your eligibility to deduct is based on your modified adjusted gross income (MAGI) and whether you or your spouse participate in a retirement plan at work.

Contributions and deductions

If you (and your spouse) are not covered by an employer-sponsored plan, contributions to a traditional IRA are fully deductible at all income levels. If you or your spouse are covered by an employer-sponsored plan, the ability to deduct your contributions is subject to income limitations as published by the IRS.


IRA withdrawals are generally taxed as ordinary income. If you make withdrawals before age 59½, you may be charged a 10% early-withdrawal penalty. There are a few exceptions that allow you to avoid the 10% penalty, which include:

  • Disability
  • Qualified first-time homebuyer ($10,000 lifetime limit)
  • Qualified higher-education expenses
  • Qualified birth or adoption ($5,000 limit per birth or adoption)
  • Qualified military reservist
  • Medical expenses in excess of 10% of adjusted gross income
  • Health insurance premiums for certain unemployed individuals
  • Substantially equal periodic payments
  • Death

While these exceptions allow you to withdraw money early without the 10% IRS penalty, you will generally pay taxes on any amount withdrawn from your traditional IRA.

Any tax or legal information on this website is merely a summary of our understanding and interpretations of some of the current income tax regulations and is not exhaustive. Investors should consult their tax advisor or legal counsel for advice and information concerning their particular situation. Allspring Global Investments does not provide accounting, legal, or tax advice or investment recommendations.

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