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Traditional IRA

Traditional IRAs can be a smart solution to increase your tax-deferred retirement savings.

What is a Traditional IRA?

A traditional IRA is an account to which you can contribute pre-tax or after-tax dollars. Your contributions may be tax deductible depending on your situation, helping to give you immediate tax benefits.

Why consider a Traditional IRA?

With a Traditional IRA, your money can grow tax deferred, but you'll pay ordinary income tax on your withdrawals, and you must start taking distributions after age 72. Unlike with a Roth IRA, there are no income limitations to opening a Traditional IRA. It may be a good option for those who expect to be in the same or lower tax bracket in the future.

Learn more about Roth vs. Traditional IRAs and which may be right for you.

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What benefits do Traditional IRAs provide for your retirement?

  • Grow potential earnings tax deferred

    This may be a good option for those who expect to be in the same or lower tax bracket in the future, as you'll pay ordinary income tax on your withdrawals. 

  • No income limitations to opening an account

    However, there are annual contribution limits to the account.

  • Current year contributions may be tax deductible

    Depending on your income level or if you don't have an employer-sponsored retirement plan, your contribution may be fully deductible.

Schwab provides tools, education, and assistance to help you feel comfortable and confident in retirement.

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    Retirement tools and resources

    Schwab offers planning calculators and more to help you manage your future.

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    Insights and education

    Stay informed with the latest market commentary, insights, and investing ideas from Schwab experts. 
     

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    Satisfaction guarantee

    At Schwab, our commitment to your satisfaction is backed by a guarantee. If for any reason you're not completely satisfied, we'll refund your fee or commission and work with you to make things right.1

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    Fees and commissions

    Regardless of your account balance or how often you trade, you can open an account with a $0 minimum deposit plus get $0 online listed equity trade commissions.2

View important information about our online equity trades and Satisfaction Guarantee


1. Schwab Satisfaction Guarantee: If you are not completely satisfied for any reason, at your request, Charles Schwab & Co., Inc. ("Schwab"), Charles Schwab Bank, SSB ("Schwab Bank"), or another Schwab affiliate, as applicable, will refund any eligible fee related to your concern. Refund requests must be received within 90 days of the date the fee was charged. Two kinds of "Fees" are eligible for this guarantee: (1) "Program Fees" for the Schwab Wealth Advisory ("SWA"), Schwab Managed Portfolios™ ("SMP"), Schwab Intelligent Portfolios Premium® ("SIP Premium"), and Managed Account Connection® ("Connection") investment advisory services sponsored by Schwab (together, the "Participating Services"); and (2) commissions and fees listed in the Charles Schwab Pricing Guide for Individual Investors or the Charles Schwab Bank Pricing Guide.
 

For more information about Program Fees, please see the disclosure brochure for the Participating Service, made available at enrollment or any time at your request. The Connection service includes only accounts managed by Charles Schwab Investment Management, Inc., an affiliate of Schwab. The guarantee does not cover Program Fees for accounts managed by investment advisors who are not affiliated with Schwab or managed by Schwab-affiliated advisors outside of the SWA, SMP, SIP Premium, and Connection services. The guarantee is only available to current clients. Refunds will only be applied to the account charged and will be credited within approximately four weeks of a valid request. No other charges or expenses and no market losses will be refunded. Other restrictions may apply. Schwab reserves the right to change or terminate the guarantee at any time.
 

2. Standard online $0 commission does not apply to over-the-counter (OTC) equities, transaction-fee mutual funds, futures, fixed-income investments, or trades placed directly on a foreign exchange or in the Canadian market. Options trades will be subject to the standard $0.65 per-contract fee. Service charges apply for trades placed through a broker ($25) or by automated phone ($5). Exchange process, ADR, and Stock Borrow fees still apply. See the Charles Schwab Pricing Guide for Individual Investors for full fee and commission schedules.
 

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. Depending on the type of account you have, there are different rules for withdrawals, penalties, and distributions. Please understand these before opening your account.


Ready to open a Traditional IRA?

The easiest way to open a Schwab IRA account is online.

The online account application process only takes about 10 minutes. Key steps include:

  • Choosing the type of IRA account
  • Providing your personal, employment, and financial information
  • Selecting specific account features
  • Creating login credentials and providing contact information for your account
  • Verifying your identity
  • Indicating how you'll fund the account
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Learn more

Common questions

Schwab will send you your account number as soon as your application is completed and approved. You can use your account number to log in and manage your account. Please note that your account must be funded before you can begin trading.

This type of account can give you immediate tax benefits, and your contributions can grow tax deferred. However, you'll pay taxes on deductible contributions and earnings when you take out money in retirement.

Choose from stocks, bonds, ETFs, mutual funds, CDs, and more. Schwab also offers professional portfolio management solutions that can make investing even easier. As a Schwab client, you can speak with a Schwab investment professional who can help you decide which investments are right for you to consider. Just give us a call at 866-855-5635. We're here and happy to help.

You can contribute $6,000 for the tax year 2021 and $6,000 for the tax year 2022 ($7,000 for tax year 2021 and $7,000 for tax year 2022 if you are at least age 50) or up to 100% of earned income, whichever is less. Income limits apply.  

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 deductible contributions and earnings when you take money out in retirement. With a Roth IRA, there are no immediate tax benefits, but contributions and 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).

Compare a Roth vs. Traditional IRA.

Account opening and funding questions

Consolidating all your accounts at Schwab may help you better manage your finances. We can help you every step of the way in bringing your assets over in a tax-efficient manner. Learn how to transfer.

  • Social security number(s)
  • Driver's license
  • Employer's name and address (if applicable)
  • Statement information for any assets or cash you'd like to transfer
  • Beneficiary information

The easiest way to open a Schwab IRA account is online. You can also get help opening an account by calling us at 866-855-5635 or visiting one of 300 local branches.

The online account application process only takes about 10 minutes. Key steps include:

  • Choosing the type of IRA account
  • Providing your personal, employment, and financial information
  • Selecting specific account features
  • Creating login credentials and providing contact information for your account
  • Verifying your identity
  • Indicating how you'll fund the account

There are multiple ways to fund your new Schwab account:

  • Electronic funds transfer (EFT) with Schwab MoneyLink® to transfer funds or assets from an external account. You may also continually fund your account by setting up auto deposit to transfer funds from your checking account.
  • Wire transfer request from another financial institution.
  • Check deposit by mail or in person at your local Schwab branch.

Full funding instructions and access to online fund transfer tools will be provided after your account is opened.

Questions? We're ready to help.