IRA (Individual Retirement Account)

An Individual Retirement Account is a personal savings account with tax advantages designed to help individuals save for retirement. There are two main types: Traditional IRAs, where contributions may be tax-deductible and withdrawals are taxed as income, and Roth IRAs, where contributions are made with after-tax dollars but qualified withdrawals are tax-free.

For 2026, the annual contribution limit for both Traditional and Roth IRAs is $7,000, with an additional $1,000 catch-up contribution for those age 50 and older. Roth IRA eligibility phases out at higher income levels, while Traditional IRA deductibility may be limited if you have access to an employer-sponsored plan.

IRAs offer a wider selection of investments than most 401(k) plans, including individual stocks, bonds, ETFs, mutual funds, and even alternative investments. The choice between Traditional and Roth depends on whether you expect your tax rate to be higher now or in retirement.