Thursday, December 17, 2020

Traditional IRA

Contribution Limits

Income Limits

Tax Benefits

Traditional IRA accounts are funded with pre-tax dollars (you make deposits using money withheld from your paycheck).

Traditional IRAs grow tax-free.

Traditional IRA accounts are taxed as income when you withdraw money. If you make the unfortunate mistake of withdrawing before age 59-and-a-half, you'll have to pay an additional 10% penalty on top of the taxes!  (Do not ever do this if you can avoid it)

Recommended Providers

Vanguard is never a bad choice.

Robo-advisors are good if you are just getting started, or if you want a hands-off approach.

Recommended Investments

Index funds are the name of the game.

Target date funds are a great way to have a mix of index funds and bonds that gradually shifts towards the safety of bonds as you get older.