IRA Accounts FAQs

The main types of IRAs are:

• Traditional IRA: Contributions may be tax-deductible, and taxes are deferred until withdrawals in retirement.
• Roth IRA: Contributions are made with after-tax income, but withdrawals in retirement are tax-free.
• SEP IRA: Designed for self-employed individuals and small business owners; allows higher contribution limits.
• SIMPLE IRA: A retirement plan for small businesses with simpler administration than a 401(k).

• Traditional IRA: Anyone with taxable income can contribute, but tax deductions may be limited based on income and workplace retirement plans.
• Roth IRA: Eligibility is based on income limits; high earners may not qualify to contribute directly.

For 2024, contribution limits are:

• Traditional and Roth IRAs: $6,500 annually ($7,500 if age 50 or older).
• SEP IRAs: Up to 25% of compensation or $66,000, whichever is less.
• SIMPLE IRAs: $15,500 annually ($19,000 if age 50 or older).

• Traditional IRA: Contributions may be tax-deductible, and earnings grow tax-deferred until retirement.
• Roth IRA: Contributions are not tax-deductible, but earnings and withdrawals in retirement are tax-free.

• Traditional IRA: Penalty-free withdrawals can begin at age 59½. Required Minimum Distributions (RMDs) start at age 73.
• Roth IRA: Contributions can be withdrawn anytime penalty-free, but earnings must meet the 5-year rule and age 59½ requirement to avoid penalties.
• Early Withdrawals: Withdrawals before age 59½ may incur a 10% penalty and taxes, except in specific situations like buying a first home or covering qualified education expenses.

An RMD is the minimum amount you must withdraw annually from a Traditional IRA starting at age 73. Roth IRAs do not require RMDs during the account holder’s lifetime.

Yes, you can have both, but the combined annual contribution limit applies to all IRAs (e.g., $6,500 for 2024).

You can open an IRA through:

• Banks or credit unions.
• Online brokerage firms.
• Robo-advisors.
• Financial advisors. You’ll need basic personal and financial information to set up the account.

IRAs offer a wide range of investment options, including:

• Stocks.
• Bonds.
• Mutual funds.
• ETFs (Exchange-Traded Funds).
• Certificates of Deposit (CDs).
• Real estate (in self-directed IRAs).