IRA
What is an IRA?
An IRA, or individual retirement account, is an account for your retirement that enables you to delay paying taxes until the money is withdrawn. It’s similar to a 401(k), but instead of the account being managed by your employer, this is an account you choose and manage yourself.
We offer three different types of IRAs: a traditional IRA with tax-deferred growth, a Roth IRA that provides tax-free growth (since you fund the account with after-tax dollars)1, and a rollover IRA that transforms your retirement account with a former employer (or another IRA) into an IRA you can contribute to continuously.
- Who is an IRA for?
An IRA can be a wise investment in anyone’s future. The type of IRA (traditional or Roth IRA) you choose should be based on your unique situation. Everyone should have a strategy for their retirement. If you think you might be in a lower income bracket when you retire, you should consider a traditional IRA because you may be able to make tax-deductible contributions.2 If you're expecting to have a higher income in retirement, consider a Roth IRA and its potential for tax-free growth.
- How does an IRA work?
IRAs can accrue interest based on the money you contribute to them. The more you contribute, the more money you may have in your retirement. The specific details and tax benefits of your IRA depend on if you choose a traditional or Roth IRA.
Consider a Rollover for your 401(k), pension, and more
In addition to traditional and Roth IRAs, you might also be eligible to roll over your retirement savings plan from a former employer. Alternatively, you can leave the money with your former employer’s plan, roll it over to a new employer’s plan, or cash out the account (though this may be subject to taxes and penalties).
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What are the benefits of an IRA?
- You can accumulate money for retirement
Traditional IRAs grow federal income tax-deferred, while Roth IRAs grow tax-free so the money you invest into your accounts today can lead to more money when you need it in retirement.
- You decide how you contribute
In 2023, the most you can contribute to all of your traditional and Roth IRAs is $6,500 if you are under 50 years old by the end of the year. After age 50, you can contribute up to $7,500 per year, giving you the flexibility to decide how much money you invest each year. Plus, if you choose a traditional IRA your contributions may be tax deductible.
- Tax-free withdrawal in retirement
Depending on the terms of your specific IRA, you may be eligible to withdraw your contributions and earn interest tax-free. With a traditional IRA, some first-time purchases like a home or college expenses may also be withdrawn penalty-free up to certain limits.
Here are the types of IRAs we offer
- Traditional IRA
A traditional IRA lets you defer taxes now and pay them when you withdraw the money for your retirement. If you suspect you’ll be in a lower tax bracket in retirement, a traditional IRA can save you money in the long run. It includes some special penalty-free withdrawals for certain purchases.
- Roth IRA
When you contribute to a Roth IRA you pay taxes on the money you contribute today, but benefit from letting those contributions grow tax-free. If you intend to contribute large sums to your retirement, a Roth IRA may help you save more money in the long run.
- Rollover IRA
A Rollover IRA is an individual retirement account that can be used for funds from a 401(k), 403 (b), 457 (b), or pension plan from a former employer. Alternatively, you can leave the money with your former employer’s plan, roll it over to a new employer’s plan, or cash out the account (though this may be subject to taxes and penalties).
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