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Understanding IRAs

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Understanding IRAs

An Individual Retirement Account (IRA) is an account that allows you to save for your retirement and take advantage of tax benefits. We’ll help you understand IRAs and their tax advantages, and decide which may be right for you.

Need IRA help? Call 866-855-5636 anytime.

Compare Roth vs. Traditional IRAs

  • View account features side by side.
  • See whether a Roth or Traditional IRA may be right for you and how much you can contribute.
Roth vs. Traditional IRA Calculator
 

Take money out of an IRA

  • Age matters for withdrawals.
  • Avoid early withdrawal penalties.
  • Learn about required distributions if you’re age 70½ or older.
     
Get withdrawal details
 

Roll over an old 401(k) to an IRA

  • Understand your rollover choices.
  • Learn the pros and cons of rolling over to an IRA.
  • Administrative IRA fees may be lower than 401(k) fees.
See rollover options

  • At a glance: Types of IRAs

  • Rollover IRA
    • May have more choices and lower fees than a 401(k).
    • No taxes or withdrawal penalties at time of transfer.
    • Funds can continue to grow tax-advantaged.
  • Traditional IRA
    • Contributions may be tax-deductible. See contribution limits.
    • Withdrawals are taxed as current income during retirement.
    • No income limitations.
  • Roth IRA
    • Contributions are not tax-deductible. See contribution limits.
    • Withdrawals are generally tax- and penalty-free after 5 years and after age 59½.
    • Income eligibility limitations.
  • Custodial IRA
    • For children under age 18 who have earned income.
    • Can be a Traditional or Roth IRA.
    • Funds can be used to pay for college.
  • Inherited IRA
    • For those who inherit a non-spousal Traditional or Roth IRA.
    • Tax-deductible contributions or IRA conversions aren’t allowed.
    • Annual distributions are required.

Nonqualified withdrawals from an IRA are subject to a 10% federal tax penalty.

Small Business Retirement? Narrow down your choices.

Owner-only business with no employees:

Get details about Individual 401(k) plans and SEP-IRAs.

Businesses with a few employees:

Get details about SEP-IRAs, SIMPLE IRAs, and Personal Defined Benefit Plans.

Businesses with many employees:

Get details about SIMPLE IRAs and 401(k)s.

See all small business retirement plans.

Take the next step.

Open a Schwab IRA today.

Apply Now or call 866-855-5636.

Helpful Resources




This tax information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner, or investment manager.