How it works.
Opening a Traditional IRA at Schwab is fast and easy. Apply online or by mail, or call us at 866-855-9095 to get assistance from a Schwab investment professional.
What is a Traditional IRA?
A Traditional IRA is an Individual Retirement Account to which you contribute pre-tax or after-tax dollars, and which allows your money to grow tax-deferred. Your money is treated as current income when you make withdrawals after age 59½. According to the Traditional IRA rules, there are no income limitations to your contributions, but you must start taking distributions after age 70½.
Traditional or Roth IRA—what's the difference?
A key consideration is whether it makes more financial sense to take advantage of immediate tax benefits or enjoy tax-free withdrawals in retirement. With a Traditional IRA, you may get immediate tax benefits, but you'll have to pay ordinary income tax on your contributions and earnings when you take money out in retirement. With a Roth IRA, there are no immediate tax benefits, but contributions and any earnings grow tax-free. All withdrawals can be taken out tax-free and penalty-free provided you're 59½ or older and you have met the minimum account holding period (currently five years).
What are the Traditional IRA contribution limits for each year?
The Traditional IRA contribution limits are $5,500 per year for tax years 2015 and 2016 ($6,500 if you are at least age 50) or up to 100% of earned income, whichever is less. Income limits apply.
Understanding Traditional IRAs
Looking for more details about Traditional IRAs? We've provided the following resources to help you learn more.
Use these calculators to help determine if a Traditional IRA is right for you.
- Roth vs. Traditional IRA Calculator
Enter a few step-by-step details to see which type of IRA you're eligible for.
- Roth IRA Conversion Calculator
Does it make sense to convert your Traditional IRA to a Roth IRA? This calculator can help you decide.
- Retirement Savings Calculator
Use this calculator to find out where you stand today with your retirement savings and what to do next.
What clients think about our Individual Retirement Accounts (IRAs):
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Clients of independent investment advisors: You may also contact your advisor or call Schwab Alliance at 800-515-2157.
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.
Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV).
1. See the Charles Schwab Pricing Guide for Individual Investors (the “Guide”) and any amendments to the Guide for comprehensive details on fees.
2. The $1,000 minimum required to open an account is waived if you set up an automatic monthly transfer of $100 through direct deposit or Schwab MoneyLink® or open a Schwab Bank High Yield Investor Checking® account linked to your brokerage account.
3. Restrictions apply: The $8.95 commission does not apply to foreign stock transactions, large block-trading transactions requiring special handling, or restricted stock transactions. All broker-assisted and automated phone trades are subject to service charges. See the Charles Schwab Pricing Guide for Individual Investors for details. Employee equity compensation transactions are subject to separate commission schedules.
4. Conditions Apply: Trades in ETFs available through Schwab ETF OneSource™ (including Schwab ETFs™) are available without commissions when placed online in a Schwab account. Service charges apply for trade orders placed through a broker ($25) or by automated phone ($5). An exchange processing fee applies to sell transactions. Certain types of Schwab ETF OneSource transactions are not eligible for the commission waiver, such as short sells and buys to cover (not including Schwab ETFs). Schwab reserves the right to change the ETFs we make available without commissions. All ETFs are subject to management fees and expenses. Please see the Charles Schwab Pricing Guide for Individual Investors for additional information.
Charles Schwab & Co., Inc. receives remuneration from third-party ETF companies participating in Schwab ETF OneSource for record keeping, shareholder services and other administrative services, including program development and maintenance.
Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with Charles Schwab & Co., Inc. Learn more at Schwab ETFs.
5. The consultation is complimentary, although the implementation of any recommendations made during the consultation may result in trade commissions or other fees, charges, or expenses. The retirement consultation is available only to clients with at least $25,000 in assets at Schwab or prospects with at least $25,000 in assets available to bring to Schwab. Individualized recommendations are available only to Schwab clients and are limited to assets held in a Schwab retail brokerage account. Information provided to prospects, or pertaining to assets held outside of Schwab, as part of the consultation are examples of the kinds of recommendations available on assets held at Schwab; these examples do not constitute recommendations, solicitations or investment advice.