Traditional IRA
What is a Traditional IRA?
Unlike a Roth IRA, the original contributions you make to your Sandia Area Traditional IRA account may be tax-deductible and your account's earnings are tax deferred. You'll have more to invest, maximizing the potential of your earnings. When you retire, withdrawals are taxed as regular income. If your original contributions were not tax-deductible, then they can be withdrawn federally tax free (state taxes may apply). If you withdraw either your original contribution or earnings before age 59½, then you may also be subject to a 10% additional tax.
Tax Advantages of a Traditional IRA
- Tax-Deductible Contributions – Depending on your income and participation in a workplace plan, your contributions may reduce your taxable income.
- Tax-Deferred Growth – Earnings grow without being taxed until you make withdrawals.
- Taxable Withdrawals – Distributions are taxed as regular income when you begin taking funds in retirement.
Who Can Contribute?
Anyone with earned income may contribute.
Single individuals covered by a workplace retirement plan that have a Modified Adjusted Gross Income (MAGI) of up to $89,000 in 2025 to make a full contribution.12
Married individuals covered by a workplace retirement plan that have a modified Adjusted Gross Income (AGI) of up to $146,000 in 2025 to make a full contribution.12
Withdrawals, penalties and distribution requirements
- All earnings and deductible contributions are taxable upon withdrawal.
- Penalties will be assessed if withdrawals are taken before age 59-1/2, or if withdrawals are not taken by age 73.
- Required minimum distributions upon reaching age 73.
Sandia Area Membership is required for all accounts. 1. Not intended as tax advice. Please consult a tax professional. The above descriptions are meant to be educational in nature. Certain restrictions apply to every type of IRAs to take full advantage of their favorable tax treatment. It's important to understand the requirements and limitations on the various IRAs. 2. According to IRS.gov IRA contribution limits.
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