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Traditional IRA FAQ

What Is A Traditional IRA?
A Traditional IRA is a special savings plan authorized by the Federal government to help you accumulate funds tax deferred for your retirement.

Who Is Eligible To Contribute To A Traditional IRA?
Every individual who has earned income or received alimony may contribute. Income from other sources such as investments or inheritances does not qualify.

I Am An Active Participant In An Employer-Sponsored Retirement Plan, May I Contribute To A Traditional IRA?
Yes, but your contribution may not be fully deductible. See chart on Retirement Accounts page.

Are Interest And Dividend Earnings Tax-Deferred?
All the earnings you accumulate in your Traditional IRA remain tax sheltered until withdrawal.

How Much Can I Contribute To A Traditional IRA?
An individual could contribute up to a limit set by the Federal government, but all of contribution may not be a fully deductible contribution. See chart Retirement Accounts page.

Must I Contribute The Full Amount Each Year?
No. You can contribute any amount your budget allows, either in one or more contributions. In fact, if you choose, you need not make any contributions in a given year.

When Can I Make Withdrawals?
Withdrawals are permitted after age 59½ or earlier with a qualified exception.

Is There A Penalty For Early Withdrawals?
Withdrawals prior to the age of 59½ or without a qualified exception generally have an additional 10% tax applied. The bank may impose a penalty also.

When Are Taxes Paid On Traditional IRAs?
Generally, distributions are taxable in the year you receive them.

Can A Traditional IRA Be Converted To A Roth IRA?
Yes, a Traditional IRA can be converted to a Roth IRA.

Can Funds Be Rolled Over From One Traditional IRA To Another Traditional IRA?
Yes, you may transfer from one Traditional IRA to another Traditional IRA tax-free. Rollovers from one Traditional IRA to another Traditional IRA are limited to one time per year tax-free.

Can My Traditional IRA Be Inherited?
Yes. When you die, the entire proceeds can be passed to your beneficiaries.

What Is the Deadline For Contributing to a Traditional IRA?
You can open or make contributions to your Traditional IRA any time up to and including the due date of your tax return for the previous tax year, normally April 15th.



Important Note

The information contained on this website is not intended to provide specific advice or recommendations for any individual. We suggest that you consult your attorney, accountant, tax or financial adviser with regard to your personal situation.