traditional IRA
Tax-deferred savings vehicle
A traditional IRA is a retirement savings account that offers tax advantages: contributions may be tax-deductible, and earnings grow tax-deferred until withdrawal.
Unlike a Roth IRA, where contributions are made with after-tax dollars, traditional IRA contributions reduce taxable income in the year they're made, but withdrawals in retirement are taxed as ordinary income.
She maxed out her traditional IRA contributions to lower her tax bill.
- retirementLeaving the workforce permanently
- 401kEmployer-sponsored retirement savings
- RothIRA permitting tax-free withdrawals
- savingsAccumulated money kept
- tax-deferredTaxes owed later, not now
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- accountsbank account, checking account, savings account, joint account, personal account
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- retirement plans401k, IRA, Roth IRA, 403b, defined benefit
- retirement savingsretirement savings, retirement funds, 403b, retirement account, retirement fund
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