Traditional IRA

Updated: Nov 5, 2020

The Traditional IRA

Everyone wants to save for retirement, but the hard part of saving for long-term goals is getting started. But even if one’s place of work does not provide a retirement plan, it doesn’t mean they’re out of luck. A Traditional IRA (Individual Retirement Account) is a great asset to work towards what we call at Concinnus Financial a “work optional” lifestyle.

This account type allows an individual to make contributions that become tax deferred, meaning the money you put into the Traditional IRA isn’t taxable until withdrawn once retired. In many cases, contributions are also tax deductible. However, there are some requirements to meet as far as income and tax filing status to get the full deduction.

Even if an individual does have a retirement plan through work, an IRA is still an excellent addition to help set aside the money needed for retirement. Often times a retirement plan through work all by itself won’t be enough to cover expenses, so having an IRA to supplement can be beneficial later on. In addition, the investment choices and decisions are much more abundant than in an employer sponsored plan. And when leaving a company for a new job, the retirement plan can be rolled over into an IRA and avoid tax penalty.

A few key points to keep in mind about a Traditional IRA.

  • In order to contribute one must have “earned income” — usually wages or self-employment income.

  • The maximum contribution limit for 2020 is $6,000, or $7,000 at age 50 and up.

  • Investments in the account grow tax-deferred.

  • Penalty-free distributions can start at age 59 1/2, and are taxed as ordinary income.

  • If a distribution is taken before 59 1/2 years old, there is a 10% penalty, in addition to ordinary income tax. Some exceptions apply.

  • The IRS requires minimum distributions (RMDs) to be taken starting at age 72.

Few of us want to work forever. Thus, whether an individual is just starting out in the work force or has been at it for years, starting a Traditional IRA  is a powerful way to get to a “work optional” lifestyle. Making it a part of the monthly budget — just like a car, rent or mortgage, or cell phone payment — is a great use of money that rewards your future self.

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Concinnus Financial Inc. is a registered investment adviser in the state of Idaho and Washington. The adviser may not transact business in states where it is not appropriately registered or exempt from registration. Individualized responses to persons that involve either the effecting of transactions in securities or the rendering of personalized investment advice for compensation will not be made without registration or exemption.


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Coeur d'Alene area. 

Phone - 509.220.1895
Idaho Phone - 208.755.9430

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