What is an IRA?

An Individual Retirement Account (IRA) is an account that allows you to save for your retirement while taking advantage of tax benefits. 

Having an IRA can be a great way to supplement any employer-sponsored retirement plan you may already have, giving you access to a potentially wider range of investment options. There are different types of IRAs, and each has different requirements and consequences, depending on your personal life circumstances and retirement goals.

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At a glance: Types of IRAs

Traditional IRA
  • Contributions may be tax deductible. See Traditional IRA limits.
  • Withdrawals of pre-tax contributions and earnings are taxed as current income during retirement.
  • No income limitations.

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Roth IRA
  • Contributions are not tax-deductible. See Roth IRA contribution limits.
  • Withdrawals are generally tax- and penalty-free after 5 years and after age 59½.
  • Income eligibility limitations.

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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.

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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.

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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.

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

Learn more about IRA types, withdrawing funds and rolling over 401(k)s

  • 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

    Roth vs. Traditional IRA calculator

  • Take money out of an IRA

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

    IRA withdrawal limits

  • Rollover an old 401(k) to an IRA

    • Understand your rollover choices.
    • See the pros and cons of rolling over to an IRA.
    • Learn the steps of the IRA rollover process.

    Account rollover options 

Common questions

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