What are the advantages of a traditional IRA?

Here are some of the main advantages of traditional IRAs.

• Tax Advantages: Unlike most investments, the interest earned on a Traditional IRA is not taxable in the year it is received. Your IRA earnings are not subject to taxation until they are removed from the account.
• Power of Compounding: This tax deferment allows your savings to grow faster and is perhaps the greatest long-term benefit of the Traditional IRA. Tax deferral on gains leaves more money in the account to compound, allowing an investment to grow larger than it would if taxes were paid along the way.
• Up-front Tax Breaks: Some investors are permitted to deduct IRA contributions from their federal income tax (depending on their eligibility).
• Special Purpose Withdrawals: Withdrawals may be made from a Traditional IRA without tax penalty by individuals under the age of 59 ½ for certain qualified purposes.

As in any tax situation, consult with your tax advisor, review IRS Pub 590 or consult the IRS website.