A traditional IRA is a tax-deferred retirement account where investments can grow tax-free. Withdrawals are taxed as income.

• pros
  • if MAGI is below limit, can subtract contributions from taxable income
  • capital gains do not incur tax
  • protected from creditors
  • if you are 70.5+ years old, you can directly donate 100k per year to charity without paying income tax
  • you can designate charities as beneficiaries and the amount designated does not incur tax and is subtracted from your estate
  • can convert part or all of IRA to a Roth IRA. the amount is taxed as income
• cons
  • low income limit
  • distributions are taxed as income
  • 10% penalty when withdrawing before 59.5 years old
  • mandatory withdrawals start at 72 years old
    • can use the 100k yearly charity limit to count towards mandatory withdrawal