If you’re older than age 50, you’re eligible to contribute an extra $1,000 for the 2024 and 2025 tax years, or a total of $8,000. This is known as a catch-up contribution.
Withdrawal rules: You are eligible to withdraw from a traditional IRA without penalty at age 59 1/2. If you withdraw from a traditional IRA before then and don’t have a qualifying reason, you’ll pay income taxes on the withdrawal, as well as a 10% early withdrawal penalty.
Additionally, you must take required minimum distributions (RMDs) beginning at age 73. RMDs are mandatory minimum withdrawals from your retirement account that you’re required to make so you’ll eventually pay income tax.
The amount of your annual RMD is based on your life expectancy as calculated by IRS actuaries. Your RMD will be taxed as ordinary income, so it is important to plan for the impact of your RMDs ahead of time.
Deduction eligibility: Your eligibility to take a tax deduction for your traditional IRA contribution hinges on three factors: your income, your tax filing status, and whether or not you are covered by a retirement plan at work such as a 401(k).
For single filers covered by a retirement plan at work: