Individual Retirement Accounts • Traditional IRAs • Contributions • Deductibility • Investments • Distributions
Traditional IRAs allow individuals with earned income to contribute up to $7,500/year ($8,600 if age 50 or older) for 2026. Contributions may be fully deductible, partially deductible, or nondeductible depending on income and active participation in an employer plan. The SECURE Act of 2019 eliminated the prior age 70½ contribution cutoff — there is now no age limit for making traditional IRA contributions. RMDs begin at age 73 (SECURE Act 2.0). The penalty for failing to take an RMD is 25% of the shortfall (10% if corrected within two years).
Deductibility phases out for active participants at $81,000–$91,000 (single) and $129,000–$149,000 (married filing jointly) for 2026. Non-participant spouses phase out at $242,000–$252,000 (joint). IRA investments may not include life insurance, collectibles (with limited exceptions for certain coins/bullion), or S corporation stock. Rollovers must be completed within 60 days and are limited to once per year; direct trustee-to-trustee transfers have no frequency limit.