- Depending on your income level, Traditional IRA contributions may be deductible from your taxable income.
Compare different retirement accounts and learn their tax benefits and rules with our Roth IRA vs. Traditional IRA infographic.
Traditional IRA FAQs
- Your deductible contributions and earnings (including dividends, interest, and capital gains) will be subject to ordinary income taxes.
- Once you reach age 70½, you must start taking Required Minimum Distributions (RMDs) each year from your Traditional IRA. You cannot redeposit your RMD.
- You can take a premature distribution (known as a "60-day rollover") from your Traditional IRA once in a 12-month period without penalty—if you replace it within 60 days. If you don't pay back the distribution within 60 days, you'll have to pay ordinary income tax on the distribution.
- First-time home purchase
- Educational expenses
- Disability or death
- Medical expenses
- Health insurance
- Periodic payments
- Involuntary distribution
- Reservist distributions
Note that with all of these exemptions, specific requirements and restrictions apply. Please check with your tax advisor to see if you qualify.
This tax information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner, or investment manager.