The Traditional IRA

A Traditional IRA is the "original" IRA. It is available to anyone, regardless of adjusted gross income. Contributions to a Traditional IRA may be deductible from current federal taxable income. Taxes must be paid upon withdrawal of any deductible contributions plus earnings and on the earnings from your non-deductible contributions.

• Individuals may contribute up to $5,000 in 2010 and married couples filing a joint tax return may contribute up to $10,000 in 2010 to a Traditional IRA. In either case, contributors must be under age 70 1/2. (If you have both a Traditional and Roth IRA, your total contributions cannot exceed the contribution limit per person per tax year.) Individuals age 50 and older may increase their contributions by $1,000 in 2010.
• Contributions may be tax deductible from your current federal income.
• The earnings on your investments are tax-deferred until you make withdrawals from the Traditional IRA.
• Prior to age 59 1/2, distributions may be taken from a Traditional IRA for certain reasons without incurring a 10 percent penalty on earnings.
• By age 70 1/2, you must begin to take certain minimum distribution amounts from your Traditional IRA.

• You or your spouse are not active participants in an employer-sponsored retirement plan, including pension, profit sharing, 401(k), SEP/IRA or 403(b) tax-sheltered annuity plans; or
• Your spouse is an active participant in an employer-sponsored plan and you are an at-home spouse or a spouse not covered by a retirement plan and your joint income is below $167,000 in 2010 or
• You are an active participant in an employer-sponsored plan and your adjusted gross income (AGI) is $56,000 in 2010 or less for single taxpayers. For married taxpayers filing jointly it is $89,000 in 2010.

You can partially deduct your contribution to a Traditional IRA even if you participate in an employer-sponsored retirement plan if your AGI is between $105,000 and $115,000 in 2010 for single taxpayers. For married taxpayers filing jointly it is between $167,000 and $177,000 in 2010.

Different rules apply if you are married and file separate income tax returns. Consult your tax advisor for more information.

Generally speaking, you may want to open a Traditional IRA if:

• You are eligible to deduct your contributions, whether fully or partially.
• You expect to be in a lower tax bracket when you retire.
• You are not covered by your employer's retirement plan.
• Your AGI exceeds the contribution limits for a Roth IRA.

Lincoln Investment Can Help

Lincoln Investment has specialized since 1968 in providing retirement planning services. A Lincoln Investment financial representative looks forward to working with you to explore the opportunities offered by a Traditional IRA.