Individual Retirement Accounts (IRAs)
Choose the IRA that's right for you.
Our two cents
Our two cents
Think you can't come up with the maximum IRA contribution each year? Consider this: It takes just $19.17 a day to contribute the current $7,000 per year maximum to an IRA.
A tax-advantaged Individual Retirement Account (IRA) is a great way to save for retirement. It may provide tax deductions, the potential for tax-sheltered long-term growth, and an opportunity to save above and beyond what you may contribute to an employer-sponsored plan.
There are two primary types of IRAs: traditional and Roth. One or the other may be right for you, depending on your circumstances.
The differences between traditional and Roth IRAs
Both traditional and Roth IRAs let your retirement savings grow tax-deferred. But there are several key differences that might make one more appropriate for you than the other.
- Traditional IRA—Contributions to a traditional IRA are tax-deductible depending on your income and whether you participate in an employer-sponsored plan such as a 401(k). Your earnings can grow tax-free but are taxed as ordinary income when you withdraw them.
- Roth IRA—There's no up-front tax deduction for a contribution to a Roth, but you can withdraw contributions any time tax-free. After age 59½, you can withdraw the earnings tax-free if it's been at least five years since you’ve first funded the account. There are also maximum income qualifications for contributing fully to a Roth – your modified adjusted gross income must be less than $150,000 for single filers and less than $236,000 if you're married filing jointly for the 2025 tax year.
How to decide:
- Consider a traditional IRA if you qualify for the up-front deduction and think your tax bracket will be lower when you retire than it is today.
- Choose a Roth IRA if you think your tax bracket will be higher when you retire—an important consideration if you haven't yet reached your peak earning years.
What you can contribute
If you have earned income, you can contribute up to the maximum annual contribution. Annual contribution limits are the same for traditional and Roth IRAs:
- For tax year 2025, you can contribute a maximum of $7,000.
- If you're 50 or older, you can make an additional $1,000 catch-up contribution for a total of $8,000.
When you can withdraw your money
To discourage people from withdrawing their money too early, there are taxes and penalties associated with early withdrawal, depending on the type of IRA. See the chart below.
You don't need an employer-sponsored plan to save for your future
You don't need an employer-sponsored plan to save for your future.
Anyone who has earned income can open a traditional IRA through a bank, brokerage, or fund company and begin investing money for retirement. For 2025, you can contribute earnings up to $7,000. When you reach age 50 that limit increases to $8,000.
Other IRAs
Depending on your circumstances, you may also want to consider one of the following accounts, all of which can be either a traditional or Roth IRA:1
- Rollover IRA—If you've changed jobs or retired and have retirement assets at a former employer
- Spousal IRA—If your spouse is not currently working but wants to contribute to an IRA
- Custodial IRA—If you want to establish a retirement account for a minor
- Inherited IRA—If you're the beneficiary of an IRA and want to preserve the tax-deferred status of the account
Comparing IRAs
Comparing IRAs
- Traditional IRA
- Roth IRA
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EligibilityAnyone with earned income can open one (and contribute up to amount of earned income).Available to single filers and those married filing jointly who make under the maximum adjusted gross income thresholds for that year.
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Tax ConsiderationsContributions are tax-deductible (depending on income level and participation in an employer-sponsored plan).Contributions are not tax-deductible.
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WithdrawalsWithdrawals are taxed at ordinary income rates.
All funds (including principal contributions) withdrawn before age 59½ are subject to a 10% penalty (subject to certain exceptions).All withdrawals of earnings and principal can potentially be tax-free, subject to certain limitations.
Contributions can be withdrawn at any time without taxes or penalties. Earnings can be withdrawn without penalty if you are at least 59½ and your account has been funded for at least five years or more.-
Mandatory DistributionsYou can begin withdrawing, penalty-free, at age 59½. Withdrawals are mandatory in the year in which you reach the required minimum distribution age.There is no mandatory distribution age.
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Exceptions to Early Withdrawal PenaltiesDeath of IRA owner.
Disability of IRA owner.
Unreimbursed medical expenses in excess of 7.5% of adjusted gross income. Medical insurance premium while unemployed (requires 12 consecutive weeks of unemployment compensation).
Qualified higher education expenses.
Qualified first-time homebuyer (up to $10,000). Substantially equal periodic payments (must continue for at least five years, or until age 59½).Qualified domestic relations order.
Keep learning
Keep learningGet started with your IRA or browse through other retirement savings options.
1. In the eyes of the IRS, there are only two types of IRAs: traditional and Roth. All other terms, such as "rollover IRA," "custodial IRA" or "non-deductible IRA" are simply unofficial terms that describe either a traditional or Roth IRA.
Investing involves risk, including loss of principal.
The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.
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Investment and Insurance Products Are: Not FDIC Insured • Not Insured by Any Federal Government Agency • Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or any of its Affiliates • Subject to Investment Risks, Including Possible Loss of Principal Amount Invested