Traditional IRA
A US retirement account funded with pre-tax dollars, taxed on withdrawal in retirement.
A traditional IRA lets contributions reduce taxable income in the year they're made (subject to income limits), with the money growing tax-deferred until withdrawal in retirement, when it's taxed as ordinary income. It tends to favor people who expect a lower tax bracket in retirement than during their working years.
Worked Example
Contributing $7,000/year to a traditional IRA reduces taxable income by $7,000 each year it's contributed — the tax bill is deferred, not eliminated, and comes due when the money is withdrawn.
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