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The Curious Bag
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Traditional IRAs allow you to take a tax deduction for your contributions. In addition, the money grows tax free in your account until retirement.
Age Restrictions
You can only contribute to a traditional IRA if your age is less than 70.5 years old.
Income Requirements
You must have taxable income equal to or greater than your contribution amount.
Contribution Limits
For 2010, your contributions are limited to $5,000. If you are older than 50, the Internal Revenue Service (IRS) allows you an extra $1,000 for a total of $6,000.
Deduction Rules
You are allowed to deduct your contributions as an adjustment to income, meaning you can still take the standard deduction in addition to your IRA deduction.
Investment Options
The IRS does not allow money in an IRA to be invested in collectible items, such as stamps or precious stones. In addition, you cannot invest in something that will personally benefit you or your family.
Withdrawal Rules
You cannot withdraw your money from your IRA until you reach age 59 1/2 unless you have an early distribution exception, such as medical expenses more than 7.5 percent of your adjusted gross income. If you withdraw the money early without an exception, you will have to pay an additional 10 percent penalty.
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