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Deductibility of traditional IRA Contributions
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Our guide Deductibility of traditional IRA Contributions helps you decide which IRA is right for you

Deductibility of traditional IRA Contributions

Retirement: For Individuals

The Principal® gives you a variety of retirement savings solutions.

Which retirement savings options are right for you?

The answer depends on your individual circumstances and years to retirement. It also depends on other factors such as availability and type of investment choices, fees, tax considerations, and accessibility of your funds.

For many investors, an IRA may be a great answer

An IRA can be an excellent way to save for or generate income during retirement. It can broaden your investment choices, offer certain tax advantages, and provide estate-planning options that other savings vehicles may not.

How does an IRA work?

An IRA is one of the most common types of retirement savings options. It is based on a provision of the tax code that allows you to set up an individual arrangement for your retirement. Some investment options within an IRA include, but are not limited to: mutual funds, stocks, bonds, annuities, and certificates of deposit (CDs).

How do you select an IRA?

Your financial professional can help you understand your options and choose the type of IRA that's right for you.

If you're just starting to save, changing jobs, retiring, or wanting to consolidate accounts, take time to learn more about:

  • Traditional IRAs
    Traditional IRAs allow certain individuals to save money tax-deferred and in certain circumstances, the ability to deduct contributions from their federal income tax. Contributions may grow tax-deferred until they're ready to begin withdrawals. Distributions can be taken at any time, but may be subject to a 10% IRS early distribution penalty if removed prior to age 59½.
  • Roth IRAs
    Roth IRAs don't allow tax-deductible contributions, but they do allow for the potential for federally tax-free withdrawal of funds with no mandatory distribution during the IRA owner's lifetime; they also allow assets to pass to heirs federally income-tax-free*. If you leave your savings in the Roth for at least five years and wait until you're 59½ to take withdrawals, you'll never pay federal taxes on the gains.
  • Rollover IRAs
    A rollover IRA can provide a broader array of investment options and the opportunity to allow your money to grow tax-deferred if you're changing jobs, retiring, or juggling multiple retirement accounts.
  • Comparison
    View a traditional and Roth IRA side-by-side.

*Roth IRA assets may be includible in estate planning calculations.



To obtain a prospectus, download online or call Sales Support at 1.800.787.1621

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Sales Support at 1.800.787.1621.

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