Individual Retirement Account (IRA)

An Individual Retirement Account (IRA) is a personal retirement savings account with tax advantages. Unlike 401(k)s, IRAs are opened by individuals, not employers.

2026 Contribution Limits:

• Annual limit: $7,500
• Catch-up (age 50+): Additional $1,000
• Total for 50+: $8,500

Traditional IRA:

• Tax-deductible contributions (income limits may apply)
• Tax-deferred growth
• Taxed at withdrawal
• RMDs starting at age 73
• Best if you expect lower tax rate in retirement

Roth IRA:

• After-tax contributions
• Tax-free growth
• Tax-free qualified withdrawals
• No RMDs (can grow forever)
• Best if you expect higher tax rate in retirement

Income Limits (2026):

Roth IRA:

• Single: Phase-out $150,000-$165,000
• Married: Phase-out $236,000-$246,000

Traditional IRA deduction (if covered by work plan):

• Single: Phase-out $79,000-$89,000
• Married: Phase-out $126,000-$146,000

Backdoor Roth IRA: High earners can contribute to Traditional IRA (non-deductible) and convert to Roth—legally bypassing income limits.

Investment Options: IRAs offer more choices than most 401(k)s:

• Individual stocks
• ETFs and mutual funds
• Bonds
• Real estate (via REITs)