Glossary
Traditional IRA
A retirement account you open on your own, where your contribution may be tax-deductible now and the money you deduct, plus its growth, is taxed as ordinary income when you withdraw it.
Updated September 15, 2026
A traditional IRA is an individual retirement arrangement: a tax-favored account you open yourself, without an employer. You may be able to deduct your contribution on your federal tax return, lowering that year's taxable income. The deduction shrinks or disappears if you or your spouse has a workplace retirement plan and your income is above set levels.
If you deduct a $3,000 contribution, your taxable income falls by $3,000. The money grows untaxed, and what you deducted, plus its growth, is taxed as ordinary income when withdrawn.
For 2026, contributions to your traditional and Roth IRAs combined are capped at $7,500, or $8,600 from age 50, and by what you earn from work. Withdrawals before age 59 and a half usually add a 10 percent penalty, with exceptions. Required withdrawals generally begin at age 73. The investments can lose value.
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How this definition was made
- Written by an AI model (Claude) following Teloria's editorial standard.
- Every factual claim was checked by a separate AI fact-check against official US government and regulator sources.
Official sources consulted
- irs.gov · /publications/p590a
- irs.gov · /retirement-plans/traditional-iras
- irs.gov · /newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500
- irs.gov · /publications/p590b
- irs.gov · /retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions
- irs.gov · /retirement-plans/traditional-and-roth-iras
- irs.gov · /taxtopics/tc557
- irs.gov · /retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs