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1. Traditional IRAs Introduction This chapter discusses the original IRA. In this publica- tion, the original IRA (sometimes called an ordinary or reg- ular IRA) is referred to as a “traditional IRA.” A traditional IRA is any IRA that isn’t a Roth IRA or a SIMPLE IRA. The following are two advantages of a traditional IRA. • You may be able to deduct some or all of your contri- butions to it, depending on your circumstances. • Generally, amounts in your IRA, including earnings and gains, aren’t taxed until they are distributed. Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: • You (or, if you file a joint return, your spouse) received taxable compensation during the year, and • You weren’t age 701/2 by the end of the year. You can have a traditional IRA whether or not you are covered by any other retirement plan. However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. See How Much Can You Deduct, later. Both spouses have compensation. If both you and your spouse have compensation and are under age 701/2, each of you can open an IRA. You can’t both participate in the same IRA. If you file a joint return, only one of you needs to have compensation. Table I-2. How Are a Traditional IRA and a Roth IRA Different? This table shows the differences between traditional and Roth IRAs. Answers in the middle column apply to traditional IRAs. Answers in the right column apply to Roth IRAs. Question Answer Traditional IRA? Roth IRA? Is there an age limit on when I can open and contribute to a . . . . . . . . . . . . . . . . Yes. You must not have reached age 701/2 by the end of the year. See Who Can Open a Traditional IRA? in chapter 1. No. You can be any age. See Can You Contribute to a Roth IRA? in chapter 2. If I earned more than $5,500 in 2018 ($6,500 if I was 50 or older by the end of 2018), is there a limit on how much I can contribute to a . . . . . . . . . . . . . . . . . . . . Yes. For 2018, you can contribute to a traditional IRA up to: • $5,500, or • $6,500 if you were age 50 or older by the end of 2018. There is no upper limit on how much you can earn and still contribute. See How Much Can Be Contributed? in chapter 1. Yes. For 2018, you may be able to contribute to a Roth IRA up to: • $5,500, or • $6,500 if you were age 50 or older by the end of 2018, but the amount you can contribute may be less than that depending on your income, filing status, and if you contribute to another IRA. See How Much Can Be Contributed? and Table 2-1 in chapter 2. Can I deduct contributions to a . . . . . . . Yes. You may be able to deduct your contributions to a traditional IRA depending on your income, filing status, whether you are covered by a retirement plan at work, and whether you receive social security benefits. See How Much Can You Deduct? in chapter 1. No. You can never deduct contributions to a Roth IRA. See What Is a Roth IRA? in chapter 2. Do I have to file a form just because I contribute to a . . . . . . . . . . . . . . . . . . . . Not unless you make nondeductible contributions to your traditional IRA. In that case, you must file Form 8606. See Nondeductible Contributions in chapter 1. No. You don’t have to file a form if you contribute to a Roth IRA. See Contributions not reported in chapter 2. Chapter 1 Traditional IRAs Page 5