Traditional IRA

Full explanation

A Traditional IRA offers tax-deferred growth — contributions may be tax-deductible (reducing your current-year AGI), investments grow without annual taxation, and withdrawals in retirement are taxed as ordinary income. For 2026: contribution limit is $7,000 ($8,000 if age 50+). Deductibility depends on whether you (or your spouse) are covered by a workplace retirement plan and your income. If covered by a plan at work, the deduction phases out at MAGI of $87,000-$97,000 (single) and $143,000-$153,000 (married filing jointly). Withdrawals before age 59.5 generally incur a 10% early withdrawal penalty plus income tax. Required minimum distributions (RMDs) must begin at age 73.

Source: IRS Publication 590-A and 590-B — IRAs