What is a traditional IRA?
A traditional IRA is a type of individual retirement account that lets your earnings grow tax-deferred.* You pay taxes on your investment gains only when you make withdrawals in retirement.
Other traditional IRA advantages
Some things to think about
Age limit on contributions
As a result of changes made by the SECURE Act, you can make contributions to a traditional IRA for 2020 or later regardless of your age.
Mandatory RMDs
You must begin taking required minimum distributions (RMDs) from your account by April 1 of the calendar year following the year you reach age 73*.
Get answers to common RMD questions
Taxable withdrawals
Withdrawals may be subject to federal income tax.
The sooner, the better
The younger you are when you open your IRA, the greater your saving potential because you get that tax-free compounding clock ticking longer for you.
Compounding
The snowball effect that happens when your earnings generate even more earnings, not only on your original investments, but also on any interest, dividends, and capital gains that accumulate. That means that your "money makes money" and can grow faster over time.
The sooner, the better
The younger you are when you open your IRA, the greater your saving potential because you get that tax-free compounding clock ticking longer for you.
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Ready to open an IRA?
New to Vanguard?
Already a Vanguard client? Log in and open an IRA.
*Due to changes to federal law that took effect on January 1, 2023, the age at which you must begin taking RMDs differs depending on when you were born. If you reached age 72 on or before December 31, 2022, you were already required to take your RMD and must continue satisfying that requirement. However, if you had not yet reached age 72 by December 31, 2022, you must take your first RMD from your traditional IRA by April 1 of the year after you reached age 73.
All investing is subject to risk, including the possible loss of the money you invest. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account.
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