What is a traditional IRA?


Quick Answer

A traditional IRA, or Individual Retirement Account, is a designated monetary account that workers can pay into in order to have savings for their retirement. Traditional IRAs are held by banks or other financial institutions.

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Full Answer

Unlike Roth IRAs, there is no limit on who can qualify for a traditional IRA as long as the account holder is able to make contributions to the account. Making contributions to the account works much the same way as putting money into a regular savings account, except that the money in a traditional IRA cannot be withdrawn prior to retirement without incurring penalties. Traditional IRA contributions are usually tax deductible.

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