Earned income is a requirement to contribute to a traditional IRA, and your annual contributions to an IRA cannot exceed what you earned that year. Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels. If you (or your spouse) earn taxable income and are under 70 and a half years old, you can contribute.
Additionally, there are many IRA Gold custodians who can help you manage your investments and ensure that your contributions are properly allocated. Many, but not all, Americans can invest in a traditional IRA with pre-tax funds and claim a deduction for their contribution in the year in which it is made. However, if you or your spouse are covered by an employment retirement plan, there are income limits for making tax-deductible contributions to traditional IRAs. If you exceed your income limits, you won't be able to contribute pre-tax funds to your account, but you'll still be able to make non-deductible contributions and benefit from tax-free growth. On a related note, there are also limits to your IRA contribution.
One method of conversion is to take a distribution from the traditional IRA and contribute it (reinvestment) to a Roth IRA within 60 days from the date of distribution. You may still want to make a non-deductible contribution, either because you prefer to allow your investments to grow tax-free and defer income taxes or because you want to make a clandestine contribution to the Roth IRA by contributing to your traditional IRA and then converting it into a Roth account. You don't have to keep your IRAs in the same accounts from the date of contribution until the date of retirement. While a Roth IRA has a strict income limit and people with incomes above it can't contribute at all, that rule doesn't apply to a traditional IRA.
You can contribute to a SIMPLE IRA or SEP no matter how high your income is, as long as you meet the eligibility requirements for these types of accounts. Traditional IRAs don't have this rule, as do other types of IRAs, such as SEP IRAs and SIMPLE IRAs, which are often used by self-employed individuals and small business owners. Remember that you are also not subject to income limits when you make contributions to a SIMPLE IRA or an SEP IRA; options that are only available if your employer offers them, if you are a small business owner, or if you are self-employed and can open one on your own. However, you can still contribute to a Roth IRA and make cumulative contributions to a Roth or traditional IRA, regardless of your age.
The ability to make non-deductible contributions regardless of income level makes traditional IRAs a valuable retirement savings account that can be converted into a clandestine Roth IRA.
