Other IRA Options
Get on Track to Retire When You Want With Three Easy Steps:
1. Open an IRA
With so many different types of IRAs, finding the right solution for your personal financial goals can seem daunting. Our expert advisors can help you understand your options and select an IRA account with the benefits and requirements to meet your retirement goals.
2. Fund Your IRA
Funds can come from various sources. Some of the most common are: rolling an old employer plan into your new account, transferring an existing IRA from another custodian, or contributing fresh funds directly.
3. Choose Your Investments
Matisse Capital can offer professional guidance on a range of investment options, including stocks, bonds, ETFs, mutual funds, CDs, and more.
What is an IRA?
An Individual Retirement Account (IRA) is a long-term investment account used to save for your retirement.
Investing in an IRA can be a great way to supplement any employer-sponsored 401(k) plan. It has specific tax benefits and potential access to a wider range of investment options. There are a variety of IRAs, each with different requirements and benefits. Choosing the right IRA for your personal circumstances and retirement goals is important to your financial success.
Types of IRAs at a Glance
Traditional IRA
- Contributions may be tax-deductible
- Withdrawals of contributions made pre-tax and earnings are taxed like current income during retirement
- Income limitations do not apply
Rollover IRA
- May have more choices and lower fees than a 401(k)
- No taxes or withdrawal penalties at the time of transfer
- Funds can continue to grow tax-advantaged
Custodial IRA
- IRA for children under age 18 with earned income
- Traditional or Roth IRA with custodian control
- Funds can be used to pay for college
Roth IRA
- Contributions are not tax-deductible
- Withdrawals are generally tax-and penalty-free after 5 years and after age 59½
- Income eligibility limitations apply
Inherited IRA
- Inherited Traditional IRA or Roth IRA from a family member or other benefactor
- Tax-deductible contributions or IRA conversions aren't allowed
- Annual distributions or liquidation of the account within a certain period is required
Nonqualified withdrawals from an IRA are subject to a 10% federal tax penalty.
Learn More About IRAs
Compare Roth vs Traditional IRAs
- Side-by-side view of features
- Benefits of both Roth and Traditional IRAs for your financial strategy
Take Money out of an IRA
- Withdrawals by account owner age
- Withdrawal penalties to avoid
- Information on Required Minimum Distributions (RMDs)
Rollover an Old 401(k) to an IRA
- Rollover choices
- Pros and cons of rolling over to an IRA
- Steps to roll over an IRA
Common Questions
The information presented in Common Questions is for the purpose of general education and does not address the investment nor legal considerations of any individual. The opinions are of Matisse Capital.
Understanding IRAs
Learn about the benefits of both Roth IRAs and Traditional IRAs, so you can make the right choice for your financial future.
Roth vs. Traditional
You can build your path to retirement with either a Roth IRA or a Traditional IRA, or both. Each has its own advantages when investing for retirement, but there are some differences that may affect how you choose to invest for your particular needs.
| Roth | Traditional | |
|---|---|---|
| Contributions | After taxes | Pre-tax, like a 401(k) |
| Best suited for | An investor who thinks that they will continue to grow their income and be in a higher tax bracket when they retire | An investor who doesn't expect to be in a higher tax bracket when they retire |
| Taxes | ||
| Earnings on contributions | Tax-free | Tax-deferred |
| Tax Benefits | Not deductible and gives you no current-year tax benefits | Contributions are tax-deductable (some limitations for investors with employer-sponsored plans) and give immediate tax benefits |
| Contributions | ||
| Contributions made from | After tax income | Pre- or after-tax income |
| Maximum Contribution (2024) | $7,000 ($8,000 for investors over age 50) | $7,000 ($8,000 for investors over age 50) |
| Eligibility | Investors with income below a certain level | Anyone with earned income |
| Age Restrictions | None | None |
| Withdrawals | ||
| Penalties | After 5 years and over the age of 59 1/2 withdrawals are penalty- and tax-free | After the age of 59 1/2 withdrawals are penalty-free and taxed as current income |
| Mandatory Distributions | None | After the age of 73 |
Key Takeaways
The decision many investors make when choosing between a Roth IRA and a Traditional IRA is what tax benefits make the most sense for their financial planning:
Tax-free withdrawals in the future, or
Focus on tax benefits today.