Traditional IRA
What is a Traditional IRA, and how does it work?
Traditional IRAs allow investors to make tax-deductible contributions into a retirement account, and any earnings are tax deferred.
What Are the Benefits of Traditional IRAs?
Tax-Deductible Contributions
All or some of your contributions may be deductible on your income tax return. Learn more about IRA tax deduction rules.
Tax-Deferred Earnings
Any earnings grow tax deferred and are taxed at your ordinary income tax rate at the time of withdrawal.
Withdrawals Potentially Taxed at a Lower Rate
Retirees are often in a lower tax bracket when making withdrawals.
Who Is Eligible?
You or your spouse (if one of you are not working and you file a joint return) must have earned income during the year. There is no age limit on making regular contributions to a Traditional IRA, as long as you have earned income.
Use our Roth IRA vs. Traditional IRA calculator to compare account types.
How Much Can I Contribute?
Annual contribution limits are listed below. If you are age 50 or older, you can contribute an additional amount—called a catch-up contribution—to your IRA each year. If you are married and your spouse is not working, you may also make a spousal contribution into an IRA under your spouse's Social Security number.1
Annual Contribution Limits | Annual Catch-Up Contribution Limits (age 50 or older) | |
|---|---|---|
Single – 2024 | $7,000 | $1,000 |
Married Filing Jointly – 2024 | $14,000 | $2,000 |
There is no Modified Adjusted Gross Income (MAGI) limit for traditional IRA contributions.
What Are My Investment Options?
You can hold investments such as mutual funds and exchange-traded funds (ETF) in a Traditional IRA through our brokerage service.
Mutual Funds
Select from a variety of no-load mutual funds based on your risk tolerance and investment objectives.
ETFs
Our ETF lineup offers a comprehensive range of active strategies, available through our brokerage service.
Brokerage
Choose from more than 10,000 mutual funds from other fund families, as well as ETFs, publicly traded stocks, bonds and more.
Additional Details
Ready to Invest?
Start your account application now and choose your investments.
Exception for Married Filing Jointly: An employed spouse may contribute to a separate IRA on behalf of a spouse who has little or no income. The amount of the couple’s combined contributions can’t be more than the taxable compensation reported on their joint return. For more information, refer to Spousal IRA sections in IRA Publication 590-A.
Modified Adjusted Gross Income (MAGI) is your Adjusted Gross Income (AGI) with standard deductions included.
IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.
This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. There are different options available for your retirement plan investments. You should consider all options before making a decision. Our representatives can help you evaluate all of your distribution options.