If you’re currently participating in your employer’s 401k or 403b plan, and you’re looking to add an additional retirement account, an IRA might be an option. Even if you don’t have access to an employer retirement plan, IRAs can still help you save for retirement.
When you hear IRA, think Individual Retirement Account (IRA). Two of the more popular options are Traditional IRAs and Roth IRAs.
If you have earned income, you can contribute to a Traditional IRA. Your contributions may be tax deductible, and earnings grow tax deferred. When you make withdraws in retirement, the earnings count as income and are taxable.
With a Roth IRA, you may contribute as long as your Adjusted Gross Income is below $118,000 (or below $186,000 if you file taxes jointly). Earnings in Roth IRAs are tax free!
For both kinds of IRAs, you can contribute up to $5,500 a year, or $6,500 a year if you are over age 50. Since these accounts are intended for retirement, you can’t make withdrawals until after age 59 ½ — withdrawals before that time are generally penalized and subject to taxes.
When it comes to retirement, an IRA can be an important and useful tool as you prepare for your golden years. For more details about IRAs, view our comparison chart.
The information on this page is provided for educational purposes only and is not tax, legal, financial planning or investment advice. Neither the information nor any opinion expressed in this section constitutes an offer to buy or sell any securities or advisory products. The information provided is general and is not information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. You should not regard this information as a substitute for the exercise of your own judgment. Investing involves risk.