Traditional IRA
A Traditional IRA allows investors to make pre-tax contributions, https://algostocks.com
which can reduce their taxable income for the contribution year.
The investments within the IRA grow tax-deferred, meaning investors don’t pay taxes on the gains until they withdraw the funds during retirement.
Tax Benefits
- Tax-Deductible Contributions: Contributions to a Traditional IRA may be tax-deductible, reducing taxable income in the year of contribution.
- Tax-Deferred Growth: Investments grow without being taxed annually, allowing the potential for compound growth.
- Potential Lower Tax Rates: Withdrawals during retirement may be taxed at a lower rate, depending on the retiree’s tax bracket at that time.