An IRA makes saving for the future less taxing
IRAs offer an opportunity to save for a comfortable retirement and long-term tax advantages too.
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What is IRA?
RETIREMENT PLANNING
An IRA can be a smart way to invest in your retirement. Learn about the different types of IRAs and how to open an account.
An individual retirement account (IRA) is a tax-advantaged investment account designed to help you save toward retirement. IRAs are one of the most effective ways to save and invest for the future. They allow your money to grow on a tax-deferred or tax-free basis, depending on the type of account (see the table below for details).
Types of IRAs
Determining which IRA is best for your unique situation depends on your age, income and financial goals. Contact us for guidance if you’re not sure which IRA might be right for you.
Traditional IRA
Traditional IRAs are tax-deferred retirement savings accounts.
- No tax on the portion of your income you invest
- No tax on additional value your investments gain
- Potential taxes on withdrawals in retirement
- Any age
- Must have earned income/wages
- Under age 50: $6,500 per year
- Over age 50: $7,500 per year
- Required minimum distributions start at age 73 (distributions are taxed)
- Penalty for withdrawals before age 59-1/2
SEP IRA
Simplified employee pension (SEP) IRAs are tax-deferred retirement savings accounts set up by business owners or self-employed individuals for themselves and any employees.
- A traditional IRA an employer sets up for themselves and employees
- Earnings grow tax free and are subject to the same rules as traditional IRAs
- Any age. However, the employer can set a minimum age (below age 21)
- Any size business, including self-employed individuals and independent contractors
- Certain salary and service requirements can apply
- Up to 25% of compensation
- $66,000 maximum
- No catch-up contributions
- Required minimum distributions start at age 73 (distributions are taxed)
- Penalty for withdrawals before age 59-1/2
Roth IRA
Roth IRAs are tax-free retirement savings accounts.
- Funded with income that has been taxed
- No tax on additional value your investments gain
- No taxes on withdrawals in retirement
- Any age
- Must have earned income/wages
- Income thresholds apply
- Under age 50: $6,500 per year
- Over age 50: $7,500 per year
- No required minimum distributions
- Penalty for withdrawals before age 59-1/2