Traditional IRA Account

One of the main benefits of a Traditional IRA is the ability to make deductible contributions. As long as you and your spouse are not covered by a workplace retirement plan, your contributions will be fully tax-deductible as long as certain income requirements are met. After investing, your account grows tax-deferred until you begin taking distributions from the account.

Potentially lower tax rate

Another tax benefit of a Traditional IRA may come into play when you remove the assets in retirement. IRA distributions are taxed at your ordinary income tax rate during the year the money is withdrawn. If your tax rate is lower at the time of withdrawal than it was when you originally contributed, you may realize considerable tax savings.

Any IRA contributions that were not tax-deductible should not be taxable when withdrawn from your account.

The IRS sets the contribution limits to Traditional IRA accounts and these limits can change each year. In addition, if you have reached age 50 on or before December 31 of the year in which the contribution is being made, you may be eligible to contribute an additional amount called a “catch-up” contribution. However, your IRA contribution can’t exceed your earned income for that tax year regardless of your age.

Investments made to an IRA or retirement account that are above allowable limits are called excess contributions. This can also happen if you were ineligible to contribute in the first place. In either scenario, excess contributions may be subject to additional taxes or penalties.

There may be several methods to remedying an excess contribution, but it’s always best to consult a certified tax advisor to find which solution works best for your situation. Contact us to learn about your excess contribution options with Janus Henderson.

The minimum initial investment to open a Traditional IRA at Janus Henderson is $100 with an automatic investment of at least $50. If you don't establish an automatic investment, the minimum initial investment is $1,000. Subsequent one-time purchases must be at least $50.

Yes. You can contribute to a Traditional IRA for a specific tax year starting January 1 of that year and you must make all contributions for the tax year by the tax filing deadline, which is typically April 15 of the following year.

Generally, you cannot make contributions after that date even if you file for an income tax extension.

There is no cost to open an account and no annual maintenance fees when account minimum thresholds are met.