Individual Retirement Account (IRA)
An Individual Retirement Account (IRA) is a simple, tax-advantaged way to save for retirement. There are two main types: a Traditional IRA and a Roth IRA. A Traditional IRA may offer tax-deductible contributions and tax-deferred growth, meaning you pay taxes when you withdraw funds in retirement. A Roth IRA is funded with after-tax dollars, but qualified withdrawals in retirement are tax-free. Both options can help you build long-term savings – the right choice depends on your current tax situation and future goals.
These funds can be invested in an IRA savings account or IRA CD, with flexible contribution options.
| Contribution & Out-of-Pocket Limits for IRAsNo Text | 2026 |
|---|---|
| IRA contribution limit | $7,500 |
| IRA catch-up contributions (age 50 or older) | $1,100 |
Traditional IRA
A Traditional IRA is a tax-advantaged retirement account available to individuals with earned income. It can be a great option for those looking to reduce their taxable income today while saving for the future.
Benefits
- Contributions may be tax-deductible, depending on your income and participation in an employer-sponsored retirement plan
- Earnings grow tax-deferred until funds are withdrawn
- You may pay taxes later – potentially when you’re in a lower tax bracket in retirement
Features
- Withdrawals can begin at age 59½ without penalty and are taxed as income
- Withdrawals taken before age 59½ may be subject to a 10% penalty, along with applicable taxes
- Required Minimum Distributions (RMDs) begin at age 73
- You can designate beneficiaries to receive your IRA assets
Roth IRA
A Roth IRA is a tax-advantaged retirement account that allows you to save with after-tax dollars today, so you can enjoy tax-free income in retirement.
Benefits
- Qualified withdrawals in retirement are tax-free
- Contributions (not earnings) can be withdrawn at any time without taxes or penalties
- No Required Minimum Distributions (RMDs) during your lifetime
- Ideal for those who expect to be in a higher tax bracket in the future
Features
- Contributions are made with after-tax dollars and are not tax-deductible
- Earnings grow tax-free, and withdrawals are tax-free if certain conditions are met
- To withdraw earnings tax-free, the account must be open for at least 5 years and you must be age 59½ or older (or meet other qualifying conditions)
- Income limits may apply for eligibility to contribute
- You can designate beneficiaries to receive your IRA assets
Rollover IRA
A Rollover IRA allows you to move funds from a previous employer’s retirement plan – such as a 401(k), 403(b), pension, or another IRA – into a Traditional IRA without triggering taxes, as long as IRS guidelines are followed. To avoid taxes and potential penalties, the rollover should be completed within 60 days of receiving the funds. Direct rollovers, where funds are transferred between institutions, are also available and can help simplify the process.
Why it matters: Rolling over your retirement funds helps you maintain tax advantages, avoid unnecessary penalties, and keep your savings growing in one convenient place.
Converting a Traditional IRA to a Roth IRA (Roth Conversion)
A Roth Conversion allows you to move funds from a Traditional IRA into a Roth IRA. The amount converted is generally subject to income taxes in the year of the conversion, but once transferred, your funds can grow tax-free and qualified withdrawals in retirement are also tax-free.
Why it matters: A Roth Conversion can provide future tax-free income and greater flexibility in retirement, especially if you expect to be in a higher tax bracket later.
Health Savings Account (HSA)
A Health Savings Account (HSA) is a tax-advantaged way to save and pay for qualified medical expenses, designed for individuals enrolled in a high-deductible health plan (HDHP). Contributions are typically tax-deductible, earnings grow tax-free, and withdrawals for eligible healthcare expenses are also tax-free – offering a triple tax advantage. Funds roll over year to year and can even be used as a supplemental retirement resource for future medical costs.
| Contribution & Out-of-Pocket Limits for HSAs & HDHPsNo Text | 2026 |
|---|---|
| HSA contribution limit (employer+employee) | Self-Only: $4,400 Family: $8,750 |
| HSA catch-up contributions (age 55 or older) | $1,000 |
| High-deductible Health Plan (HDHP) minimum deductibles | Self-only: $1,700 Family: $3,400 |
| HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums) | Self-Only: $8,500 Family: $17,000 |
The information included on this webpage is intended as a general guide. For advice specific to your financial and tax situation, please consult a qualified tax professional.