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Traditional IRA

Is a traditional IRA right for you?
Traditional IRAs allow your assets to grow tax-deferred until withdrawn at retirement.  Contributions to a Traditional IRA may be tax-deductible (depending on your adjusted gross income), offering you the potential for tax savings today.  Money may also be withdrawn penalty-free if it falls within certain guidelines.  To help you make a better informed decision on whether or not a Traditional IRA is suitable for you, review the key features listed below.

Key features of a traditional IRA

 Feature Description
Under age 70½ with earned compensation.

Maximum Annual Contribution Limit
2013: $5,500.
(This is the maximum total that may be contributed to all of your IRA accounts annually.)

Catch-up Contributions
Over age 50 (as of the end of the calendar year), you may contribute an additional $1,000 annually.

Tax Advantage
Assets grow tax-deferred without penalties or tax consequences until withdrawal.

Tax Deductibility
The amount of the contribution may be tax-deductible, depending on your adjusted gross income (AGI) and your participation in an employer-sponsored retirement plan.

Full Deductibility
Single:  Up to $60,000.
Married Filing Jointly:  Up to $96,000.

Partial Deductibility
Single:  Up to $70,000.
Married Filing Jointly:  Up to $116,000.

Required minimum distributions must start at age 70 ½.

If you are under age 59½ and your withdrawal is not for one of the following reasons, the withdrawal will be subject to a 10% early withdrawal penalty:
  • Death or disability of account owner
  • Part of a series of substantially equal periodic payments
  • Certain major medical expenses
  • Medical insurance premiums after the IRA owner has received unemployment compensation for more than 12 weeks
  • Qualified first time home purchase
  • Qualified higher education expenses
  • IRS levy