Today on the Finance Flash Go! podcast, the topic is Traditional Individual Retirement Accounts!
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A Traditional IRA or Traditional Individual Retirement Account is an investment account available to any individual.
You can contribute up to $6000 yearly (as of 2020) to a Traditional IRA. Also, money put into this account is not taxed. Again, the money grows and then is taxed upon withdrawal (when your effective tax rate is likely lower).
Withdrawing money without a 10% penalty can begin at age 59½ as long as the money has been in the account for at least 5 years.
The main issue with Traditional Individual Retirement Accounts is that the initial tax deduction upon contributing money is phased out for individuals making more than $75,000 or married couples making more than $125,000 in 2020.
Physicians will be above this income limit and therefore, their contributions will be taxed twice – once at contribution and once at withdrawal!
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2 Responses
And I thought you could withdraw money from an IRA at 59 1/2 not 70.5 without penaly
Sorry yes that is correct! You can withdraw from IRA at 59.5 as long as money has been held in the IRA for at least 5 years