Traditional IRAs Offer Tax Advantages Now … and Later

Safeguard your retirement savings with a Traditional Individual Retirement Annuity (Traditional IRA) that offers advantages now and in the future. Flexibility is one feature that makes it a valuable tool for creating a long-term plan to meet your retirement needs.

Helpful Features

Individuals who choose Traditional IRAs:

  • Enjoy potential tax-deductible contributions based on their Modified Adjusted Gross Income (MAGI), tax filing status and coverage by an employer-sponsored plan at work
  • Eliminate paying taxes on earnings until they are withdrawn (a tax advantage for those in lower tax brackets when they retire)
  • Have the option of withdrawing funds at any time, although withdrawal before age 59-1/2 in certain situations may incur a 10 percent early distribution penalty
  • Have the ability to participate in additional employer-sponsored plans, although it may affect eligibility for tax deductions

Traditional IRAs also are useful for transferring money in several ways:

  • To defer taxes by rolling over funds from an employer-sponsored plan like a 401(k)
  • To move funds to a Roth IRA.

Eligibility

In order to contribute to a Traditional IRA, one must:

  • Have an earned income equal to their contribution amount for that year, and
  • Not reach age 70-1/2 by the end of the calendar year in which they will contribute.

Distributions

At age 70-1/2, individuals must start taking a Required Minimum Distribution (RMD). The first RMD is required by April 1 of the year following the year a person reaches age 70-1/2. Additional distributions thereafter need to be taken by Dec. 31 each year.

For additional information about Traditional IRAs, contact your local Woodmen of the World Representative.

ICC10 87 4-10, 87 4-10 (XX), O-87 4-10 (XX)

 

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