The Primary Benefit of Contributing to a Traditional IRA

Retirement savings might not have to take a back seat just because your partner doesn't earn income. An individual retirement account (IRA) is a tax-advantaged investment account that helps you save for retirement. Money can grow tax-free or tax-deferred until you withdraw it in retirement. One of the primary benefits of contributing to a traditional IRA is the potential for tax deductions on your contributions, which can help lower your taxable income.

“Saving for retirement helps to secure your future and offers tax benefits,” said Rozleen Giwani, a certified public accountant and partner at Grassi Advisors. Contributing to a traditional IRA can be a smart financial move as it allows you to save for retirement while potentially reducing your current tax burden. This can help you build a nest egg for your golden years while also enjoying some tax savings along the way.

A brokerage account is an investment account that allows you to buy stocks, bonds, mutual funds, and other investments. Here's what you need to know about the benefits of contributing to a traditional IRA. You have until April 15, 2023, to contribute to an IRA—up to $6000 for tax year 2022, or a total of $7000 if you're 50 or older. This deadline gives you plenty of time to make contributions and take advantage of the potential tax benefits.

A Simplified Employee Pension IRA (SEP IRA) is a traditional IRA for self-employed people and small-business owners. It allows you to contribute a percentage of your income to the account, up to certain limits. This can help you save for retirement while also potentially lowering your tax bill. A traditional IRA is an account to which you can contribute pre-tax or after-tax dollars. Your contributions may be tax-deductible depending on your situation, providing you with immediate tax benefits.

A Roth IRA is a type of tax-advantaged individual retirement account to which you can contribute after-tax dollars toward your retirement. While contributions to a Roth IRA are not tax-deductible, the earnings in the account grow tax-free, and qualified withdrawals in retirement are tax-free as well. This can be a valuable option for individuals who anticipate being in a higher tax bracket in retirement or who want tax-free income in their golden years.