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Traditional IRA
We all know that we need to save for retirement. And an Individual Retirement Account (IRA) is an account designed for just that. Think of it as your own personal pension plan. The more you fund it, the better chance you’ll have of retiring someday on your terms – not someone else’s.
Even if you already participate in a company retirement plan, a Traditional IRA is available to you. You choose how often and what amount to contribute as well as in which funds to invest.
When you contribute to a Traditional IRA, you may be able to deduct your contribution from your taxes. If so, you’ll get a larger tax refund from the IRS or send a smaller check to them for the taxes you owe.
Even if you can’t take a tax deduction for your contribution, all contributions grow tax-deferred, which means you won’t pay taxes until you withdraw your funds someday.
- You can contribute to a Traditional IRA if you or your spouse have earned income*, regardless of your age.
Tax Year | Contribution Limit if Under Age 50 | Contribution Limit if 50 or Over | Contributions Accepted Between |
| 2023 | $6,500 | $7,500 | Jan. 1, 2023 - April 15, 2024 |
| 2024 | $7,000 | $8,000 | Jan. 1, 2024 - April 15, 2025 |
- If you make a contribution for the previous tax year between January 1 – April 15, attach a note with your check instructing us to post it as a “Prior Year Contribution.” A prior year contribution must be postmarked by April 15th.
- Automatic Investment Plan contributions will post as current year contributions.
- The minimum initial investment for all Sit IRA accounts is $2,000 (per fund). The minimum subsequent investment is $100.
Note: Although everyone may contribute to a Traditional IRA, your adjusted gross income** will determine contribution tax deductibility.
* Earned income includes wages, salaries, tips, professional fees, bonuses, commissions, self-employment income, nontaxable combat pay, military differential pay, taxable alimony, separate maintenance payments, difficulty of care payments and certain stipend, fellowship and similar payments to graduate and postdoctoral students.
**Annual income is your Modified Adjusted Gross Income, which is your Adjusted Gross Income before certain deductions or adjustments are made. For more information see IRS Publication 590-A at www.irs.gov.
Traditional IRA Withdrawals
You can withdraw money from your Traditional IRA at any time and distributions are taxed as ordinary income, but if you make a withdrawal before age 59½, you will owe an additional 10% penalty tax (unless an exception applies). Once you turn age 59½, distributions are no longer subject to the penalty tax.
Once you reach a certain age, you are required to start taking annual distributions. This table summarizes the ages at which your Required Minimum Distributions (RMDs) must begin:
Birth Year | Age at Which RMDs Begin |
| 1950 or earlier | 72 (70½ for those who turned 70½ prior to 2020) |
| 1951-1959 | 73 |
| 1960 or later | 75 |
An important feature of Traditional IRAs is the tax deductible nature of contributions made to the account. In many cases 100% of your contribution can be deducted from your income when reporting your taxes, however there are scenarios in which only part or none of the contribution can be deducted. Marital status, your spouse’s active participation in a retirement plan, and your modified adjusted gross income are factors that are used to determine whether or not your IRA contribution is tax deductible.
Choose the following statement that best describes your situation:
- I am single and not covered by a company retirement plan, or I am married and neither my spouse nor I is covered by a company retirement plan. (Chart #1)
- I am married and not covered by a company retirement plan, but my spouse is covered by a company retirement plan. (Chart #2)
- I am single or the head of a household and covered by a company retirement plan. (Chart #3)
- I am married and covered by a company retirement plan. (Chart #4)
Traditional IRA Tax Deductibility Chart 1 (Single with no company plan coverage, or married with no company plan coverage and spouse with no company plan coverage)
| Chart #1 | Eligible Deduction Income Range |
||
| Tax Year | Full Deduction | Partial Deduction | No Deduction |
| 2023 | More than $0 | N/A | N/A |
| 2024 | More than $0 | N/A | N/A |
Traditional IRA Tax Deductibility Chart 2 (Married with no company plan coverage; spouse with company plan coverage)
| Chart #2 | Eligible Deduction Income Range |
||
| Tax Year | Full Deduction | Partial Deduction | No Deduction |
| 2023 | Less than $218,000 | $218,000 - $228,000 | More than $228,000 |
| 2024 | Less than $230,000 | $230,000 - $240,000 | More than $240,000 |
Traditional IRA Tax Deductibility Chart 3 (Single and covered by company retirement plan)
| Chart #3 | Eligible Deduction Income Range |
||
| Tax Year | Full Deduction | Partial Deduction | No Deduction |
| 2023 | Less than $73,000 | $73,000 - $83,000 | More than $83,000 |
| 2024 | Less than $77,000 | $77,000 - $87,000 | More than $87,000 |
Traditional IRA Tax Deductibility Chart 4 (Married and covered by company retirement plan)
| Chart #4 | Eligible Deduction Income Range |
||
| Tax Year | Full Deduction | Partial Deduction | No Deduction |
| 2023 | Less than $116,000 | $116,000 - $136,000 | More than $136,000 |
| 2024 | Less than $123,000 | $123,000 - $143,000 | More than $143,000 |
- The Sit Traditional IRA annual custodial fee is waived if your account balance is $10,000 or more.
- The annual Traditional IRA custodial fee is $15 if your account balance is less than $10,000. We will notify you in November and you may pay the fee then or, if unpaid, we will deduct the fee in mid-December for your convenience.
- If your Traditional IRA account balance is less than $10,000 when you close your IRA, the fee will be deducted from your check.
- Your Traditional IRA contributions are reported on IRS Form 5498 (“IRA Contribution Information”), which is mailed to you in May.
- Your Traditional IRA redemptions are reported on Form 1099-R (“Distributions from IRAs”), which is mailed to you in January.
A tax credit reduces the amount of tax owed. With the IRS Saver’s Credit, you may be able to take a tax credit of up to $1,000 ($2,000 if married filing jointly) for your IRA contribution.
To claim the IRS Saver’s Credit, you must be 18 or older, not be a full-time student, not be claimed as a dependent on someone else’s tax return, and your income must not exceed the appropriate thresholds referenced below.
Maximum Income Allowed Before the Saver’s Credit is no Longer Permitted
| Tax Year | Single | Head of Household | Married Filing Jointly |
| 2023 | $36,500 | $54,750 | $73,000 |
| 2024 | $38,250 | $57,375 | $76,500 |
For more information, see IRS Form 8880, available at www.irs.gov.