What Are the Tax Benefits of an IRA?
Traditional IRAs and ROTH IRAs are similar in many ways. However, traditional IRAs offer some unique tax benefits you should know about if you’re trying to choose between individual retirement accounts.
- Assets in a traditional IRA grow tax deferred, withdrawals are taxable as ordinary income.
- A traditional IRA can help you reduce your taxable income right away. However, if you already have a workplace retirement plan, you might not qualify for deductible IRA contributions.
Whether you’re trying to reduce your taxable income, save for your retirement, or grow your wealth through investments, an IRA offers various tax benefits, which makes it an attractive option for anyone.