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Traditional IRAs

Contributions to a Traditional IRA are tax-deductible, with certain restrictions. When you withdraw money in retirement, it is taxed as ordinary income. If you withdraw money before age 59½, you must generally pay tax on the withdrawal, plus a 10% penalty.

If you think your tax rate in retirement will be lower than it is now, and if you do not plan to withdraw your money before age 59½, a Traditional IRA may be the best choice for you.

Compare the benefits of Traditional and Roth IRAs.

Frequently Asked Questions


Contributions and Tax Deductibility


Establishing a Domini IRA


Can I establish a Traditional IRA?

Generally, if you have earned income from a job or alimony, you can establish a Traditional IRA before the tax year when you reach age 70½. Contributions can be fully or partially tax-deductible depending on your individual circumstances. Contributions are fully deductible if you do not participate in an employer-sponsored retirement plan. (See below for other limits on deductibility.) Beginning in the calendar year in which you reach age 70½, you can no longer make contributions to a Traditional IRA.

If I am covered by a retirement plan, am I eligible to open an IRA?

You may have a Traditional IRA even if you are covered by a qualified pension, profit-sharing, or other retirement plan, but you may be limited in the amount of the contributions that are tax-deductible. To be covered means that money is contributed to your account, whether or not you contribute yourself. For limitations on deductibility, see below.

Contributions and Tax Deductibility

When can I contribute?

You can open an IRA, or contribute to an existing IRA, at any time from January 1 of a given year up to the tax filing day of the following year. The tax filing day is the absolute deadline, even if you have received an extension beyond that date for filing your tax return. For tax year 2013, you can open or make contributions to a Traditional IRA until April 15, 2014.

How much can I contribute to IRAs each year?

For 2013 and 2014, you can contribute up to $5,500 per year or 100% of your taxable compensation* for each year, whichever is less. Alimony is counted as earned income, but pension and investment income are not. These contribution limits apply to total contributions to all IRAs (Traditional and Roth).

Age 49 and under
Age 50 and older
Additional $1,000 (total $6,500)
Additional $1,000 (total $6,500)

*Taxable compensation includes wages, commissions, self-employment income, alimony, and combat pay. It does not include such things as property income, interest and dividends, or pension or annuity income.

Is my IRA contribution tax-deductible?

If you and your spouse do not participate in an employer-sponsored retirement plan, then your Traditional IRA contribution is generally fully tax-deductible, whatever your income level. Contributions to Roth IRAs are not deductible.

If you do participate in an employer-sponsored retirement plan on any day during the tax year, you can still contribute to a Traditional IRA, but the deductibility of your contributions declines to zero beyond certain modified adjusted gross income (“MAGI”)* ranges, as described in the tables below.

Married Filing Jointly or Qualifying Widow or Widower (participating in qualified retirement plan)

Tax Year
Full Deduction
Partial Deduction
No Deduction
$95,000 MAGI
> $95,000 but < $115,000 MAGI
$115,000 MAGI
$96,000 MAGI
> $96,000 but < $116,000 MAGI
$116,000 MAGI

Single Filer or Head of Household (participating in qualified retirement plan)

Tax Year
Full Deduction
Partial Deduction
No Deduction
≤ $59,000 MAGI
> $59,000 but < $69,000 MAGI
$69,000 MAGI
≤ $60,000 MAGI
> $60,000 but < $70,000 MAGI
$70,000 MAGI

*Modified Adjusted Gross Income: “Adjusted gross income” is total income lowered by certain deductions known as adjustments, but before taking itemized deductions or a standard deduction, and before taking the deduction for personal exemptions. Modified adjusted gross income (“MAGI”) is the amount of income that determines how much of an individual's IRA contribution is deductible. MAGI is computed by taking adjusted gross income, and subtracting certain Roth IRA conversion or rollover amounts, and adding back certain items such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs. Please see IRS Publication 590 for complete details.

If your filing status is married filing jointly, and your spouse is covered by an employer-sponsored retirement plan at work

  • For tax year 2013, the deductibility for your contribution begins to phase out when your MAGI is more than $178,000 and reaches zero at $188,000. 
  • For tax year 2014, the deductibility for your contribution begins to phase out when your MAGI is more than $181,000 and reaches zero at $191,000.

What if I don't have $5,500?

The law doesn't require a minimum contribution. You can start an IRA at Domini Social Investments with as little as $1,500. If your taxable compensation is under your contribution limit, you can contribute all or part of it to an IRA.

What if both my spouse and I have taxable compensation?

If both of you have earned income, you can establish separate Traditional IRAs and can contribute up to a total of $11,000 each year for tax years 2013 and 2014 (up to $5,500 each). If you are both over the age of 50, you can contribute up to a total of $13,000 each year for tax years 2013 and 2014 (up to $6,500 each). If your combined income is less than your combined limits, the combined IRA contributions are limited to 100% of your taxable compensation.

What if my spouse doesn't work?

If one spouse has taxable compensation of less than $5,500 for tax years 2013 or 2014 (or $6,500 if each of you is at least age 50 during the year), a Traditional IRA can be established based on the income of the higher-earning spouse. In this case, the combined total contributed may be up to $11,000 each year for tax years 2013 and 2014 (or up to $13,000 if each of you is at least age 50 during the year), divided between the two accounts in any way desired, so long as neither account receives more than $5,500 each year (or $6,500 if each of you is at least age 50 during the year).


Can I withdraw money from my Traditional IRA?

Beginning at age 59½, you can withdraw money from your IRA as desired without penalty. You can do this whether or not you are still employed. You may be taxed on these withdrawals.

Withdrawals before age 59½ are called "early distributions," and are subject to an penalty of 10%, in addition to any tax that may be due. There are several exceptions to the penalty on early distributions:

  • Unreimbursed medical expenses ˃7.5% of your adjusted gross income.
  • Health insurance, if unemployed and distributions are not more than the cost of your medical insurance.
  • You are disabled.
  • Qualified education expenses, and the distributions are not more than these expenses.
  • You use the distributions to buy, build, or rebuild a first home.
  • You are the beneficiary of a deceased IRA owner.
  • You are receiving distributions in the form of an annuity.
  • The distribution is due to an IRS levy of the qualified plan.
  • You withdraw money in a series of “substantially equal period payments” based on your life expectancy. Please consult your tax advisor or visit the IRS website at for details on this method.

To withdraw funds from your Domini IRA, please call us at 1-800-582-6757 or submit an IRA Distribution Request Form.

Do I have to take distributions from my Traditional IRA between ages 59½ and 70½?

No, you have complete flexibility between ages 59½ and 70½.

Do I have to take distributions from my Traditional IRA after 70½?

Yes. By April 1 following the year in which you reach age 70½, and by December 31 thereafter, you must begin to withdraw a certain minimum amount annually. If by the applicable deadline the required minimum amount is not distributed, the amount not taken is subject to a 50% IRS excise tax. This tax may be waived by the IRS upon submission of a written request.

How are distributions taxed?

With one exception, all distributions from a Traditional IRA are taxed as ordinary income. There is no special tax treatment for lump-sum distributions from an IRA. The exception is that if you have made nondeductible contributions to your IRA, a certain portion of your withdrawals will be nontaxable until you have recovered the exact amount of your nondeductible contributions.

Are federal income taxes withheld from my distributions?

The tax code requires that you make a choice concerning the distributions you receive from your Traditional IRA. The law requires that federal income tax be withheld from IRA distributions (other than certain distributions of excess contributions) — unless you tell us that you do not want any taxes withheld.

If you choose to have taxes withheld, they will be withheld at a flat rate of 10% of the amount of each distribution, or a higher amount if you so choose, and turned over to the government as a prepayment of your federal income tax liability for the year the distribution is made.

Establishing a Domini IRA

Open a Domini IRA

If your company offers a SEP or SIMPLE retirement plan, please call 1-800-582-6757 to ask how to add the Domini Funds to your plan.

Can I transfer an IRA from another company to Domini?

You can transfer a traditional or Roth IRA from one IRA custodian to another as often as you like. To transfer an IRA from another company to Domini, please visit Account Maintenance Forms in our Investor Services section and select “IRA Transfer Form.”

Can I roll over assets in an account such as a 401(k) plan to a Domini Traditional IRA?

Yes. Through a rollover, you can move assets from an employer-sponsored retirement account, such as a 401(k) or 403(b), into a Domini Traditional IRA (subject to IRA rules). You can convert and roll over money directly into a Domini Roth IRA. For more information, please see our 401(k) Rollover Information page.

Is there a fee?

There is an annual $10 maintenance fee for Domini IRA accounts. In addition, although the Domini Funds Investor class shares are no load, certain fees and expenses apply to a continued mutual fund investment. These are described in the Prospectus.