Traditional IRA Account

Save Today, Retire Smarter: Open a No-Fee Traditional IRA and Enjoy Tax-Deferred Growth!
Open a Traditional IRA

What is a Traditional IRA

A traditional IRA is an individual retirement account that allows you to make contributions with pre-tax dollars, meaning your yearly IRA contributions are tax deductible each year. Earnings grow tax-deferred until you withdraw them in retirement. Keep in mind, there are tax rules that may limit the tax-deductibility of your traditional ira contributions based on your income.

Benefits of a Traditional IRA

Broad Investment Options
You can invest in a variety of assets, including stocks, bonds, mutual funds, ETFs and more, providing flexibility to align with your financial goals.
Wide Eligibility
Unlike Roth IRAs, there are no income restrictions for contributing to a Traditional IRA.
Tax Benefits
Contributions and earnings grow tax-deferred so you wait to pay taxes, and contributions may also be tax-deductible (subject to income limits and participation in employer-sponsored plans).
Lower Tax Burden in Retirement
If you expect to be in a lower tax bracket during retirement, deferring taxes until then can reduce your overall tax liability. This is a key difference between traditional IRAs and Roth IRAs. With a Roth IRA, there's no tax benefit up front as compared to the tax-deferred contributions in a traditional IRA.

Why choose a Firstrade Traditional IRA?

  • $0 commission fees on online trades
  • Earnings and withdrawals can potentially be tax-free
  • Choose from a wide rangeof investment options
  • $0 commission fees on online trades

Traditional IRA Rules

You can contribute up to the maximum contribution limit to a traditional IRA regardless of your income, provided your earned income is higher than that year's contribution limit. Your ability to deduct traditional IRA contributions from your tax bills is dependent on your income and your workplace retirement plan, and/or your spouse's.

Tax Advantages
  • Contributions may be tax-deductible, depending on your income and whether you or your spouse are covered by a workplace retirement plan
  • Tax-deferred growth until withdrawals begin
Contribution Limits Per Year2024: $7,000 (or $8,000 if age 50 or older)
2025: $7,000 (or $8,000 if age 50 or older)
(Subject to IRS adjustments)
Deduction limit

2025 — You are covered by a retirement plan at work

Filing statusModified adjusted gross income (MAGI)Deduction limit
Single individuals≤ $79,000
> $79,000 but < $89,000
≥ $89,000		Full deduction up to the amount of your contribution limit
Partial deduction (calculate)
No deduction
Married (filing joint returns)≤ $126,000
> $126,000 but < $146,000
≥ $146,000		Full deduction up to the amount of your contribution limit
Partial deduction(calculate)
No deduction
Married (filing separately)Not eligible
< $10,000
≥ $10,000		Full deduction up to the amount of your contribution limit
Partial deduction
No deduction

2025 — You are NOT covered by a retirement plan at work

Filing statusModified adjusted gross income (MAGI)Deduction limit
Single, head of household, or qualifying widow(er)any amountA full deduction up to the amount of your contribution limit
Married (filing jointly with a spouse who is not covered by a plan at work)any amountA full deduction up to the amount of your contribution limit
Married (filing jointly with a spouse who is covered by a plan at work)$236,000 or less
> $236,000 but < $246,000
≥ $246,000 or more		Full deduction up to the amount of your contribution limit
A partial deduction (calculate)
No deduction
Married (filing separately with a spouse who is covered by a plan at work)< $10,000
≥ $10,000		Partial deduction
No deduction
Withdrawals
  • All earnings and deductible contributions are taxable upon withdrawal
  • 10% early withdrawal penalty if taken before age 59 1/2 (with some exceptions)
  • IRA account owners are required to begin taking the annual Required Minimum Distribution (RMD) from their accounts beginning in the year the owner reaches age 73.
  • You can start taking your first RMD until April 1 of the year following the year you turn 73. After the first RMD, the deadline December 31 of each year.
*Deductibility is income-dependent and may be limited if you or your spouse are covered by a workplace plan. Subject to certain restrictions. Please consult with your tax advisor.

Interested in Learning More About Retirement Accounts?

Learn about the basics of retirement, from types of accounts available to taking minimum required distributions (MRDs).

Dive deeper into how these two accounts differ from each other and take control of your retirement.

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