What are the advantages of a Traditional IRA?

Unlike a Roth IRA , the original contributions you make to your account may be tax-deductible and your account's earnings are tax-deferred, so you'll have more to invest, maximizing your potential earnings return . When you retire, withdrawals are taxed as regular income. If your original contributions were not taxdeductible, then they can be withdrawn federally tax free (state taxes may apply). Contributions may be fully taxdeductible if the following is applicable: Neither you nor your spouse is an active participant in an employer-sponsored retirement plan and you meet the modified gross income limitations (PDF) . If you withdraw either your original contribution or earnings before you are age 59 1/2, then you may also be subject to a 10% additional tax.

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Traditional IRA

Q: What are the contribution limits?

Contributions must be made prior to each year's tax return deadline for the corresponding year, typically April 15th. For each year during which you are age 50 or older, you can make an additional catch up contribution. Be aware of the potential penalties if you exceed your IRA contribution limits .

Q: What investment choices will I have?

At Merrill, you'll have access to a full range of investment choices. Select from a wide array of stocks, bonds, options, ETFs, well-known mutual funds and managed portfolios. You may also consider investing in a Money Market IRA or Featured CD IRA offered through Bank of America, N.A.

Q: Are there any fees associated with a Traditional IRA?

Your Merrill Edge Self- Directed traditional IRA has unlimited $0 online stock, ETF and option trades with no trade or balance minimums. Options contract and other fees may apply See pricing for details on any fees associated with a Traditional IRA.

Q: How do I open an IRA?

It takes just minutes to open your account online. Then, you can quickly fund your new Merrill Traditional IRA and start investing with help from a variety of free resources. Decide how you want to manage your account or if you already know, go directly to Open an Account .

Q: Can I borrow from my traditional IRA?

Generally, you cannot take out a loan from either a traditional or Roth IRA.

Save and invest for retirement with potential federal income tax‑deferred growth

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With a traditional IRA, generally you make contributions to save for retirement and pay taxes on withdrawals later.Footnote ¹

Traditional IRA Account Benefits

Make potentially tax-deductible contributionsFootnote ²

Let earnings potentially grow federal income tax‑deferred until withdrawn

Defer federal income taxes until you make withdrawals laterFootnote ¹

Invest in stocks, mutual funds, ETFs and more

Question:

What is my contribution limit for a traditional IRA?

Answer:

You may be eligible to contribute up to $7,000 per year ($8,000 if you are 50 or older)Footnote ²

What's a key difference between a traditional IRA and a Roth IRA?

With a traditional IRA, your contributions may be tax deductible. Federal income taxes are deferred until you make withdrawals. With a Roth IRA, you always contribute after-tax dollars and make potentially tax-free withdrawals in retirement.Footnote ³

Select to Learn more about all IRAs available at Merrill

Find out if your savings are on track for retirement

Our Personal Retirement Calculator can help you estimate how much you'II realistically need to retire and whether or not you're on track for achieving that goal.

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Which retirement account is right for you?

Compare the features of retirement accounts available at Merrill, find out which ones you're eligible for and learn about details like contribution limits and potential tax advantages.

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Find the investments that work for your portfolio, whether you're interested in trading stocks, ETFs, mutual funds or fixed income investments.

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Frequently Asked Questions

Expand all

What are the potential advantages of a Traditional IRA?

Unlike a Roth IRA, the original contributions you make to your account may be tax-deductible and your account’s earnings, if any, are federal income tax-deferred — so you can have more to invest, maximizing your potential earnings return.
When you retire, withdrawals are taxed as regular income. If your original contributions were not tax-deductible, then they can be withdrawn federally tax free (state taxes may apply).
Contributions may be fully tax-deductible if the following is applicable:
- Neither you nor your spouse is an active participant in an employer-sponsored retirement plan and you meet the modified gross income limitations (PDF).
If you withdraw either your original contribution or earnings before you are age 59½, then you may also be subject to a 10% additional tax, unless an exception applies.

Am I eligible for a Traditional IRA?

Anyone who has earned income equal to or greater than their IRA contribution is eligible.
If you or your spouse contribute to an employer—sponsored retirement plan like a 401(k) or 403(b), you may still be eligible for a Traditional IRA but your contributions may not be tax deductible.
If you have no earned income but your spouse earns enough income to cover your contribution as well as their own, you can still make contributions to your IRA
There's no limit to the number of individual retirement accounts (IRAs) you can own, as long as they do not exceed the maximum contribution across all accounts.

What are the contribution limits?

What investment choices will I have?

Are there any fees associated with a Traditional IRA?

How do I open an IRA?

Can I borrow from my traditional IRA?

Can I make withdrawals from a traditional IRA?

Here are some general details on IRA rules. In a handful of instances, you might not owe an additional 10% federal tax when you withdraw assets from a traditional or Roth IRA before age 59½. Eligible withdrawals include money used:

For a qualified first-time homebuyer distribution (up to $10,000; in line with federal tax laws)
For qualified higher education expenses (in line with federal tax laws)
If you become permanently disabled (in line with federal tax laws)
For the birth or adoption of a child (up to $5,000; in line with federal tax laws)

Footnote asterisk

Other fees may apply. Free and $0 means there is no commission charged for these trades. $0 option trades are subject to a $0.65 per-contract fee. Sales are subject to a transaction fee of between $0.01 and $0.03 per $1,000 of principal. There are costs associated with owning ETFs. To learn more about Merrill pricing, visit our Pricing page.

Footnote

The required beginning date for RMDs is age 73 You may defer your first RMD until April 1st in the year after you turn age 73, but then you'd be required to take two distributions in that year. Failure to take all or part of an RMD may result in up to a 25% additional tax applicable to the amount of the RMD not withdrawn. Consult your tax advisor for more information on your personal circumstances.

Footnote

Contribution and compensation limits are subject to a cost-of-living adjustment annually pursuant to the Internal Revenue Code. Contribution and compensation limits for subsequent years may vary.

Footnote ³ There is a single, 5-year holding period when determining whether earnings can be withdrawn federal (and, in most cases, state) income tax-free as part of a qualified distribution from a Roth IRA. This period begins January 1 of the year of the first contribution to any Roth IRA account.

Footnote

Merrill waives its commissions for all online stock, ETF and option trades placed in a Merrill Edge^® Self-Directed brokerage account. Brokerage fees associated with, but not limited to, margin transactions, special stock registration/gifting, account transfer and processing and termination apply. $0 option trades are subject to a $0.65 per-contract fee. Other fees and restrictions may apply. Pricing is subject to change without advance notice.

For broker-assisted trades through Merrill Edge, you will be charged a fee equal to the lower of $29.95 or 5.00% of the principal amount of the transaction. Further, there are indirect fees, such as annual management and other similar fees, that are charged by the manager or sponsor of an exchange-traded fund and of a closed-end fund, as disclosed in the product's prospectus.

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Investment products offered through MLPF&S and insurance and annuity products offered through MLLA:

Are Not FDIC Insured	Are Not Bank Guaranteed	May Lose Value
Are Not Deposits	Are Not Insured by Any Federal Government Agency	Are Not a Condition to Any Banking Service or Activity

Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary (PDF).

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member Securities Investor Protection (SIPC) popup and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

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Unlimited $0 Trades

With Merrill Edge Self‑Directed, get unlimited free online stock, ETF and option trades with no trade or balance minimumsFooter footnote ^b

Options contracts and other fees may applyFooter footnote ^a

Open an account with Merrill Edge Self-Directed

Footer footnote
Other fees may apply. Free and $0 means there is no commission charged for these trades. $0 option trades are subject to a $0.65 per-contract fee. Sales are subject to a transaction fee of between $0.01 and $0.03 per $1,000 of principal. There are costs associated with owning ETFs. To learn more about Merrill pricing, visit our Pricing page.
Footer footnote

Investment products offered through Merrill Lynch, Pierce, Fenner & Smith Incorporated, and insurance and annuity products offered through Merrill Lynch Life Agency Inc.:

Are Not FDIC Insured

Are Not Bank Guaranteed

May Lose Value

Are Not Deposits

Are Not Insured by Any Federal Government Agency

Are Not a Condition to Any Banking Service or Activity

Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

The performance data contained herein represents past performance which does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance information current to the most recent month end, please contact us.

Net Asset Value (NAV) returns are based on the prior-day closing NAV value at 4 p.m. ET. NAV returns assume the reinvestment of all dividend and capital gain distributions at NAV when paid.

Market price returns are based on the prior-day closing market price, which is the average of the midpoint bid-ask prices at 4 p.m. ET. Market price returns do not represent the returns an investor would receive if shares were traded at other times.

Returns include fees and applicable loads. Since Inception returns are provided for funds with less than 10 years of history and are as of the fund's inception date. 10 year returns are provided for funds with greater than 10 years of history.

Before investing consider carefully the investment objectives, risks, and charges and expenses of the fund, including management fees, other expenses and special risks. This and other information may be found in each fund's prospectus or summary prospectus, if available. Always read the prospectus or summary prospectus carefully before you invest or send money. Prospectuses can be obtained by contacting us.

Expense Ratio – Gross Expense Ratio is the total annual operating expense (before waivers or reimbursements) from the fund's most recent prospectus. You should also review the fund's detailed annual fund operating expenses which are provided in the fund's prospectus.