Individual Retirement Accounts

Key Points

Keep in mind the following:

• Individuals may contribute $7,000 in 2025 and an additional $1,000 if age 50 before the end of the year.
• Contribution limits are shared across all IRAs.
  • For example, someone age 30 adding $5,000 to a Roth IRA would mean they could contribute up to $2,000 more in a traditional IRA for their total $7,000 limit in 2025.
• Traditional IRAs count as a "write-off" to reduce taxable income
• Roth IRAs do not reduce taxable income but grow tax-free

Types of IRAs

We'll limit our discussion to traditional and Roth IRAs here since these are two of the most common account types.

Roth IRAs

The gold standard of personal finance recommendations, Roth IRAs allow contributions using after-tax dollars and grow 100% tax-free thereafter. However, they are subject to income thresholds which vary based on tax filing status. Check where you fall on the Roth IRA income limit scale.

This is a great starting point if you are self-employed or do not have access to a retirement plan at work.

Learn how to invest in a Roth IRA with a video guide or with pictures and detailed steps.

Traditional IRAs

Commonly referred to as just an "IRA," traditional IRAs allow pre-tax contributions but will be taxed upon withdrawal in retirement. If you are over the above-stated income limit for Roth IRA contributions, this is a good account to use.

Learn how to invest in a traditional IRA with a video guide or with pictures and detailed steps.