Traditional IRA


A traditional IRA (individual retirement arrangement) is a personal savings account that helps you save for retirement and grow earnings tax-deferred until withdrawal. Many investors save in an IRA in addition to their employer-sponsored plan. A Commerce Financial Advisor can help you compare a traditional IRA to a Roth IRA to determine which approach is best suited to your situation.


  • Contributions can be tax-deductible or non-tax-deductible. (Consult with your tax advisor.)

  • Earnings grow tax-deferred until withdrawn after age 59½, at which time they are taxed at your current rate.

  • A wide range of investment options is available



  • Minimum annual withdrawals are required when you reach age 72 (known as required minimum distributions).

  • Your ability to make deductible contributions may be reduced or eliminated if you are covered by an employer-sponsored retirement plan and varies based on your income.

  • Beneficiaries pay income tax on proceeds after your death.

  • Most may convert a Traditional IRA to a Roth IRA.

  • IRS penalties may apply to withdrawals prior to age 59 ½

Tax Considerations*

  • Your deduction is allowed in full if you (and your spouse, if you are married) are not covered by a retirement plan at work.

  • Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels.



  • Anyone who has earned income equal to or greater than their IRA contribution amount.

  • If you contribute to an employer-sponsored plan such as a 401(k) you may still be eligible to contribute to a Traditional IRA.

  • If you have no earned income but your spouse earns enough income to cover your contribution as well as his or her own, you can contribute to a Traditional IRA.

Income Limits

  • No limits for nondeductible contributions

Type of Investments

  • Stocks, bonds, mutual funds, exchange-traded funds (ETFs), U.S. Treasuries, Brokered CDs, unit investment trusts (UITs), and annuities

Annual Contribution Limits

  • $6,500 under age 50

  • $1,000 additional catch-up contribution if age 50 and over

  • You may contribute simultaneously to a Traditional IRA and a Roth IRA (subject to eligibility) if the total contributed to all (Traditional and Roth IRAs) does not exceed described limits.


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