A Traditional Individual Retirement Arrangement (T-IRA) is a special savings plan authorized by the Federal government to help you accumulate funds for your retirement, tax deferred. The earnings you accumulate in your T-IRA, including interest and dividends, remain tax deferred until withdrawn. Every individual who has taxable compensation may contribute to a Traditional IRA. Income from other sources such as investments or inheritances does not qualify.
Rules for Spousal IRAs
Spousal IRA rules enable married couples filing jointly to contribute the maximum amount to separate IRA accounts even if one spouse has no earned income.
There is a 10% IRS penalty for withdrawing all or part of the account before age 59 1/2, with some exceptions. The IRS allows voluntary distributions any time after age 59 1/2, with mandatory distributions starting at age 70 1/2 or 72, depending on your birthdate. As part of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, you do not have to take withdrawals until age 72 if your birthday is July 1, 2019 or later. If you turned 70 1/2 prior to January 1, 2020, your required minimum distribution (RMD) is based on age 70 1/2. More information is available at the IRS's website.
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