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Traditional IRA

Tax-deferred individual retirement account that may allow a current-year tax deduction and usually taxes withdrawals later in retirement.

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A Traditional IRA is a U.S. individual retirement account built around tax deferral: contributions may reduce taxable income now, while withdrawals are generally taxed later.

It is one of the core retirement-account structures used when households want to save outside an employer plan or move old plan assets into a personal account.

Why It Matters

Traditional IRAs matter because they change the timing of taxation.

  • contributions may offer a current tax deduction

  • investment growth compounds without annual tax drag inside the account

  • retirement withdrawals are usually treated as taxable income

That timing can make a Traditional IRA attractive when a saver expects current tax relief to be more valuable than tax-free withdrawals later.

  • IRA: The broader account category that includes Traditional and Roth structures.

  • Roth IRA: The main after-tax contrast to the Traditional IRA.

  • 401(k) Plan: Employer-sponsored retirement account often compared with IRAs.

  • Rollover IRA: Common IRA form used when assets leave a workplace plan.

Revised on Monday, May 18, 2026