How to open traditional IRA account

Traditional IRA is a traditional retirement account, which is a tax deferred investment account and taxable when you withdraw the money at retirement age. If you withdraw your traditional IRA account before retirement age you need to pay early withdrawal penalty as well, on the top of your income tax.

Instructions

1. You can open traditional IRA account at most banks, financial institution or brokerage firm. Open traditional IRA online is the easiest way to open your traditional IRA account.

2. Make sure you use reputable company to open your IRA account. Most reputable brokerage firm can walk you through to open traditional IRA account online. However they also send you some paper works and account agreement by mail as well, which required your signature.

3. There is a contribution limit for your traditional IRA account, in 2008 the contribution limit is $5,000 or your taxable income if it is smaller than $5,000.

4. There is a modified adjusted gross income limit as well to be able to take the full deduction of your IRA account contribution. In 2008 if you're married and your spouse cover by a 401K plan at work, your deduction start to phase out if your total income between $156,000 to $166,000 and there is no deduction if your total modified adjusted gross income more than $166,000. Consult with your tax advisor for more information.