What is a Traditional IRA and how does it work?
The most common IRA, a Traditional Individual Retirement Account, allows an individual to get a tax deduction for money that is set aside for retirement. The money put into an IRA and the investment earnings on those contributions are not taxed until they are withdrawn. Who can set up a Traditional IRA? To be eligible for a Traditional IRA, a person must have received earnings from work during the year and be under age 70 ½. In addition, if an individual participates in a pension, 401(k) or other retirement plan offered by their employer, that person may not be able to contribute to a Traditional Deductible IRA if their income is above certain specified amounts. For example, if you are covered by a pension, 401(k) or other employer-provided retirement plan, for 2008 you can only take a full tax deduction for your IRA contribution if your earnings for the year are less than $53,000 (or if you are married, if your joint earnings are under $85,000). You can get a partial deduction if your
