A Traditional IRA (Individual Retirement Account) is a retirement account you open on your own, outside of work, that can lower your taxes today and grow tax-deferred.
How it works
You open the account at a financial institution and contribute money, which you can invest in a wide range of options. Depending on your income and whether you have a retirement plan at work, your contributions may be tax-deductible. Your money grows tax-deferred, and you pay income tax on withdrawals in retirement.
2026 contribution limits (IRS)
- $7,500 per person
- $1,100 extra catch-up contribution if you’re 50 or older, for a total of $8,600
- This limit is shared across all your Traditional and Roth IRAs combined.
You generally need earned income to contribute. A non-working spouse can contribute through a spousal IRA if the couple files jointly. You can make contributions for a tax year up until that year’s tax-filing deadline.
Is it deductible?
If neither you nor your spouse has a retirement plan at work, your contribution is generally fully deductible. If you do have a workplace plan, the deduction phases out at higher incomes. For example, in 2026, for married couples filing jointly where the contributing spouse is covered by a workplace plan, it phases out between $129,000 and $149,000 of income.
Who it may suit
- People without a workplace retirement plan
- Those who want a tax deduction now and expect a lower tax bracket in retirement
- Anyone who wants more investment choices than their 401(k) offers
- People rolling over a 401(k) from a former employer
What to watch for
- Withdrawals before age 59½ are generally subject to income tax plus a 10% penalty, with some exceptions.
- Required minimum distributions generally begin at age 73 (75 for those born in 1960 or later).
- Investments can lose value.
Source: IRS, 2026 cost-of-living adjustments (IR-2025-111). For educational purposes only; not tax or investment advice. Workable Financial Solutions does not offer securities or investment advisory services. Consult a tax professional about your situation.