Traditional IRA

You want retirement planning to be a little easier, that’s why we’ve provided you with these frequently asked questions about Traditional IRAs. We also provide a comparison chart of the Roth IRA and Traditional IRA to help you determine which IRA is right for you.

What is an IRA?

A special savings account, authorized by the government, which allows you to save for retirement.

Who is eligible to contribute to an IRA?

Individuals who have earned income or receive alimony can contribute to a Traditional IRA. Income from sources such as investments or inheritances does not qualify. Contributions may not be made for or after the year in which you turn age 70 1/2.

How much may I contribute to an IRA?

Each year you can contribute all or part of your compensation up to:

  • Individual taxpayer - $5,500
  • Married taxpayer - $11,000 (each spouse can contribute up to $5,500)
  • Taxpayers over 50 years old can contribute an additional $1,000 for tax year 2017.

Are there other rules or limitations?

Yes, here are some additional rules you should know:

  • All earnings you accumulate in your Traditional IRA remain tax-sheltered until withdrawn.
  • Total yearly contribution that can be made by an individual to all IRAs is $5,500 ($6,500 for individuals over age 50 in tax year 2017) not counting rollover contributions.
  • If you are an active participant in an Employer-Sponsored Retirement Plan, your IRA contribution may still be fully or partially deductible, depending on your income level. For more detailed information regarding this issue you should contact your tax advisor or accountant.

How can I get more information?

We realize that sometimes you need more information to make your retirement decisions. If you’d like to talk with a Dedham Savings retirement expert, visit one of our branches or call our retirement planning department at 781-320-1458 and we’ll be happy to share everything we know.