Life · Chapter 11 · IRAs
Traditional IRA
Definition
Individual retirement account: anyone of any age with EARNED income may contribute up to the annual limit or 100% of compensation, whichever is less (currently $7,500, +$1,100 catch-up at 50+ → $8,600). Growth is tax-deferred; contributions may be fully, partly, or non-deductible depending on income and employer-plan coverage.
Exam tip
⚠️ Deductibility ≠ eligibility. ANYONE with earned income can CONTRIBUTE; being covered by an employer plan + higher income only limits the DEDUCTION. Exam convention: the answer they want for "best IRA funding vehicle" is the flexible premium fixed deferred annuity. (Dollar limits are inflation-indexed — learn the rules, not the numbers.)
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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