Retirement Investing: Charles Schwab: Traditional IRAs

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Traditional IRA

What is a Traditional IRA?
A Traditional IRA is an Individual Retirement Account that allows you to save and invest for retirement until age 70½. This type of account can give you immediate tax
benefits, and your contributions will also grow tax-deferred. However, you’ll pay taxes on contributions and earnings when you take out money in retirement.

You can contribute to this account from your own savings, or by rolling over funds from qualified employer-sponsored retirement plans.

You’ll be able to contribute up to $5,000 for tax year 2009 and 2010, or up to 100% of earned income, whichever is less. Individuals age 50 and over can make catch-up contributions of $1,000 for 2009 and 2010 tax years, respectively, from earned income.

View the Roth IRA and Traditional IRA comparison chart.

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Answers to IRA questions

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Important Disclosures

This information is for general informational purposes only and is not intended as an individualized recommendation or to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner or investment manager.

All expressions of opinion are subject to change without notice in reaction to shifting markets, as well as tax and estate planning rules. Examples provided are for informational purposes only and not intended to be reflective if results you can expect to achieve.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

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