Traditional IRA Definition

A traditional IRA, or individual retirement account, is a financial instrument that allows individuals to contribute pre-tax funds to a personal retirement account. Any individual can open a traditional IRA, regardless of employment status; however, the amount that can be contributed on a pre-tax basis is limited by several factors. Withdrawals at or after retirement are treated as ordinary income and are subjected to potential income taxation. Traditional IRA accounts are very useful for individuals who do not have an employer-sponsored retirement option.