IRAs: individual retirement accounts

An IRA is a retirement account you open on your own, at a bank, brokerage or other financial company. It's useful if you don't have a workplace plan, or want to save more.

Two main types

• Traditional IRA: contributions may be tax-deductible, and withdrawals are taxed
• Roth IRA: contributions aren't deductible, but qualified withdrawals are tax-free; there are income limits to contribute directly

Good to know

• There's a yearly contribution limit, shared across your IRAs
• You need earned income to contribute (a spouse's income can count in some cases)
• Opening an IRA is just the first step: you also have to choose investments inside it
• Compare account fees and investment costs before opening

General education only. Limits and income rules change; check IRS.gov. Nickel Gains isn't paid by any broker, fund company or adviser.