Traditional IRAs

Learn how traditional IRAs work — and why they still make sense for many investors.

We encourage you to consult your tax advisor or financial professional to discuss your financial goals, eligibility and individual tax situation. For additional information, you can also refer to IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), and IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), at


You (or your spouse, if filing a joint return) can contribute if you have earned income (a salaried job, investments and other sources).

Annual contributions

For 2024, the IRA annual contribution limit is $7,000 or 100% of your compensation, whichever is less.

Catch-up provisions

For 2024, individuals age 50 and older may contribute up to an additional $1,000 to their IRAs.

Contribution deadline

Contributions for the current tax year must be made by April 15 of the following year.

Deductible contributions

Depending on your tax-filing status, modified adjusted gross income (MAGI) limits and retirement plan participation, you may be eligible to deduct your full contribution, part of it or none of it. Your MAGI is calculated by subtracting certain expenses and allowable adjustments from your gross income. To determine your MAGI, contact your tax advisor.

Use the table below to determine who can take a deduction.

2024 MAGI

Tax-filing status

Fully deductible

Partially deductible

Not eligible

Single (IRA owner is covered by a retirement plan at work)

$77,000 or less


$87,000 or more

Joint (IRA owner is covered by a plan at work)

$123,000 or less


$143,000 or more

Joint (IRA owner’s spouse, not IRA owner, is covered by a plan at work)

$230,000 or less


$240,000 or more

Nonparticipants in a retirement plan

IRA investors who are not covered by a retirement plan at work and who are single or who have a spouse not covered by a plan at work can contribute up to $7,000 in 2024 (compensation must equal or exceed the contribution) and can deduct the full contribution amount. There is no maximum MAGI limitation.

Nonrefundable tax credits

Eligible taxpayers can claim a nonrefundable tax credit for contributions to their IRAs. The maximum credit allowed is 50% of total annual contributions up to $2,000, so long as household income doesn't exceed certain limits.

For 2024, joint filers with a MAGI of $76,500 or less and single filers with a MAGI of $38,250 or less qualify.

Unemployed spouses

Unemployed spouses (or spouses not covered by a retirement plan at work) can make tax-deductible contributions to an IRA, even if the other spouse is covered by a retirement plan at work.

Up to $7,000 in 2024 (spouses age 50 and older may contribute an additional $1,000) may be contributed as long as the couple files a joint tax return with compensation equal to or exceeding the IRA contributions for the year.

If the employed spouse is covered by a retirement plan, the unemployed spouse can make tax-deductible contributions to an IRA if the couple’s combined MAGI is less than $230,000 for 2024. The deduction is phased out if the couple’s combined MAGI is within $230,001–$239,999.

Penalty-free early withdrawals

You may withdraw money penalty-free before age 59½ for any of the following reasons:

  • A first-home purchase, up to $10,000 (lifetime maximum)
  • Qualified higher education expenses for yourself, a spouse, child or grandchild
  • Contributions made with after-tax money
  • Certain periodic payments, medical expenses and health insurance premiums
  • If assessed with a levy by the IRS
  • Upon disability or at death
  • Payments made while you are terminally ill
  • Payments of up to $22,000 made in connection with federally declared disasters
  • Birth or adoption expenses (up to $5,000)
  • Distributions for unforeseeable or immediate financial needs related to necessary personal or family emergency expenses (up to the lesser of $1,000 or the excess of your account balance over $1,000)
  • Distributions due to domestic abuse (up to the lesser of $10,000 as adjusted for inflation or 50% of the account balance)


These exceptions are often referred to as 72(t) provisions because they fall under Internal Revenue Code Section 72(t).

All withdrawals are taxed as ordinary income.

Setup and annual fees

Capital Group traditional IRA fees include:

  • A one-time setup charge of $10 per Social Security number
  • An annual custodian fee of $10 per Social Security number

Note: The setup charge and annual fee discussed above also cover SEP accounts with the same Social Security number. A separate $10 setup charge and annual custodian fee apply to the following accounts:

  • Roth IRAs

Converting to a Roth IRA

Assets in a traditional IRA may be converted to a Roth IRA regardless of your MAGI or tax-filing status.

Required minimum distributions (RMDs) from the traditional IRA are not considered part of the MAGI. Investors age 73 and older who would be subject to RMDs from their traditional IRAs may be able to convert to a Roth and avoid future distributions. The SECURE 2.0 Act increased the age when RMDs must begin from 72 to 73, effective for individuals turning 72 on or after January 1, 2023. If you reached age 72 before this date, you are still required to take RMDs. Investors should consult with their financial professionals to determine the best option for their situations.

The taxable portion of the converted amount will be treated as taxable income.

Future contributions can be made to the new Roth IRA.

A conversion must be initiated by December 31 of a given year to be considered a conversion for that taxable period.

Converting to a Roth IRA is a taxable event, and the rules and tax calculations can be complicated. State income-tax rules for conversions may differ from federal rules. We encourage you to discuss conversion options with your tax advisor or financial professional.


Share classes for rollover IRAs

Rollovers from retirement plans must be invested in Class A shares (generally with a front-end sales charge) or in Class C or F shares, according to the purchase policies described in each mutual fund’s prospectus.

Related tools

Learn more about the IRAs Capital Group offers.

IRAs (traditional and Roth)

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
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Effective July 1, 2024, American Funds Distributors, Inc. was renamed Capital Client Group, Inc.
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