Why should you consider a Traditional IRA?

Are you looking for a way to save for retirement beyond the retirement plan offered through your employer? If so, you may want to consider a traditional individual retirement account (IRA). These retirement plans not only can supplement your current savings, but they provide tax advantages.

A traditional IRA allows you to reduce your taxable income by the amount you contribute, then pay income taxes on the money when you withdraw it in the future. You reduce your income taxes now and create an income stream in your retirement years.

Benefits of traditional IRAs

Traditional IRAs offer several benefits that make them a popular option to help boost retirement savings. They offer:

• A way to supplement your retirement savings outside of your employer-sponsored programs. Traditional IRAs are also a popular option if you don't have access to a retirement savings plan through your employer.
• Tax-deferred growth potential. Traditional IRAs are tax-deferred, meaning you contribute pretax dollars and defer paying taxes until you withdraw funds. The benefit of tax-deferral is that it gives your money the potential to grow over the long term.
• Your contributions may be tax-deductible. If you (or your spouse) don't have access to an employer-sponsored plan, traditional IRA contributions are tax-deductible. If either of you does have an employer-sponsored retirement plan, your contributions are tax-deductible if your income falls below certain thresholds.
• Qualified withdrawals that are penalty-free. While the express purpose of a traditional IRA is for retirement savings, life happens, and you may need some of the funds early. You can make penalty-free withdrawals before the age of 59½ for qualifying expenses, such as a birth, an adoption, educational expenses or a first-time home purchase.
• A choice of a variety of investment options. With a 401(k) or other retirement plan offered through your employer, you may be limited in the available investment choices. However, opening a traditional IRA allows you to choose from stocks, bonds, mutual funds and ETFs, which can help you diversify your portfolio and meet your risk tolerance.