Individual Retirement Accounts (IRA) are tax-advantaged investment accounts that can be used to accrue retirement savings. Your IRA contributions may be tax-deductible or withdrawals may be tax-free. If you are interested in investing in an IRA, consider the following.  

To open an IRA account, all you must do is speak to a broker or visit a robo-advisor. You’ll be able to invest in stocks and bonds by putting money in the account. As you continue to invest, your account balance can grow over time. This is often a more effective means of building wealth than taxable accounts.

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There are several common types of IRA accounts, traditional, Roth, SEP, and SIMPLE. This is what each type of plan has to offer:

Traditional IRA

This type of IRA allows owners to make pre-tax contributions in a tax-deferred account. The owner will have to pay income tax once they withdraw from the IRA. They typically have contribution limits that cap the amount you are allowed to contribute to the account in any given year. In 2021, the limit for people younger than 50 is $6,000. For people above that age, the limit is $7,000. The income contributed may be tax deductible and you won’t be penalized unless you withdraw the money early. 

Roth IRA

These are special retirement accounts that require you to pay taxes on money that enters the account, but withdrawals are tax-free. This account is ideal for people who think they may have a higher tax burden in retirement than they do during their working years. Roth IRA’s do limit account contributions to people who earn below a certain income threshold, so they aren’t going to work for high earners. In 2021, the limit for singles is $140,000 and for married couples, it’s $208,000. There are also annual contribution limits that start at $6,000 per year for people below age 50. For people above that age, the limit is $7,000.


The simplified employee pension plan is an IRA that an employer or self-employed individual can open. The plan owner is allowed to make tax deductions for contributions made to their SEP IRA and contributions can be made to all eligible employee plans. These plans are popular because they often have higher annual contribution limits than traditional and Roth IRAs. Another benefit is that employer contributions to employees are vested immediately. 


This is a retirement savings plan that can be leveraged by small businesses with 100 or less employees. The acronym SIMPLE stands for Savings Incentive Match Plan for Employees. With this type of account, employers can choose to make a non-elective contribution of 2% of the employee’s salary or a dollar-for-dollar match of all employee contributions. If they choose the match option, the limit is 3% of the employee’s total salary. There is a limit to how much employees can contribute to a SIMPLE IRA in a single year. In 2021, the contribution limit is $13,500. This amount changes periodically based on inflation.

Open Your Own IRA

IRAs are an effective vehicle that can help consumers build a reasonable retirement income. They allow you to create a strategy that allows you to minimize tax burdens and save more money in the long term. Many financial services companies carry quality IRA products, consider reaching out to learn more about these useful tools.