Which statement accurately describes a traditional IRA?

A traditional IRA (Individual Retirement Account) allows individuals to make contributions that can be tax-deductible, meaning that the money you contribute can reduce your taxable income for the year. This is a significant benefit, as it helps lower your current tax burden. The key feature of a traditional IRA is that the money grows tax-deferred over the years, and you will owe taxes on the funds only when you withdraw them during retirement. This tax treatment is attractive for many investors, as it allows them to potentially be in a lower tax bracket in retirement compared to their working years.

The requirement for withdrawals, as seen in other options, does not kick in until age 72, not 59, and contributions are not restricted to high-income earners; anyone within the income limits specified by the IRS can contribute to a traditional IRA. The option regarding after-tax contributions aligns more closely with a Roth IRA, where contributions are made with after-tax dollars and withdrawals are tax-free, not applicable to a traditional IRA at withdrawal time. Therefore, the answer accurately captures the essence of how traditional IRAs operate in terms of contributions and withdrawals.