If you or your spouse retire before the age of 60, there is a 10% penalty. Eligible retirement plans that you can transfer or consolidate to a traditional IRA include 401 (K), s, 403 (B), s, SIMPLE IRAs, and SEP IRAs. While long-term savings in a Roth IRA can result in better after-tax returns, a traditional IRA can be an excellent alternative if you qualify for the tax deduction. Although IRAs are taxable investments, you don’t pay tax on the amount you deposit into a traditional IRA until you take it out of retirement.
