Traditional IRAs are the most basic IRA available for retirement planning and offer potential deductible contributions and tax-deferred growth. Individuals under the age of 70 1/2 with earned income are eligible. Deductible contribution limits depend upon the individual's participation in an employer-sponsored plan and modified adjusted gross income. Withdrawals before age 59 1/2 are subject to income tax and a 10% penalty. The penalty is not assessed in special situations. Distributions must begin by April 1st of the year following the year the individual reaches age 70 1/2. The account must be set up and contributions made by April 15th in order to be considered qualifying contributions for the previous tax year.
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