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Traditional Individual Retirement Account

Traditional IRAs give the ability for individuals to contribute pretax income to an account, up to an annual contribution limit. These contributions may be used to invest into marketable securities (stocks, bonds, and other approved funds). Dependent on an individual's income tax-bracket, and tax filing status, contributions may be tax deductible.

When an individual hits the age of 59.5 and starts receiving distributions from the account, those distributions are considered income, and are taxed as such. The benefit of deferred tax implications is that at retirement, you are likely to have a lower tax bracket.

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