A Traditional IRA (Individual Retirement Account) is a great choice for those looking to invest pre-tax income into investments that have the potential for tax-deferred growth. This is a great option for those who expect to be in the same or lower tax bracket when they retire.
Traditional IRAs offer certain tax advantages to individuals who are seeking to deduct all or a portion of their contributions, effectively lowering annual taxable income for each year's contributions. For Individuals looking for an easy way to build their retirement portfolio who want to defer paying taxes until after retirement, a Traditional IRA could be a good choice.
Building a portfolio with a Traditional IRA can offer a tax-advantaged way to save for retirement, while helping to secure a more financially comfortable retirement.
Your income (and tax bracket) is likely higher than it will be when you retire, contributing to a tax-deferred plan now may save you tax dollars later.
Contributing earlier helps to maximize the compound growth potential of your investments. Your contributions work harder as they may accumulate earnings and grow tax-deferred until you’re ready to start enjoying your retirement.
You must have taxable compensation to be eligible to contribute. While there are no income limit restrictions to contribute, tax deductions could be limited if you also contribute to an employer-sponsored retirement plan.
All or part of your contributions may be tax-deductible, which may reduce your taxable income each year you contribute.
You may be able to hang on to more of your hard-earned dollars during retirement if you’re in a lower tax bracket when you begin withdrawing.
It starts with understanding the differences.
When deciding between a Traditional IRA and a Roth IRA, it's important to understand the different regulations and advantages of each account, considering factors like income limitations and the potential for tax benefits.
T. Rowe Price offers a broad range of one-stop retirement funds, low-cost mutual funds, and digital investing powered by our experts—all with historically competitive long-term performance.
If you’re looking for an easy way to build your retirement portfolio and want to defer paying taxes until after you retire, a Traditional IRA could be a good choice.
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