Below is a brief description of the most popular IRA accounts. More details are available for each IRA type.
IRA: An IRA, or Individual Retirement Arrangement, is usually set up by individuals and contributions are generally tax deductible when you put them into your IRA. Principal and any earnings grow tax deferred till withdrawal. Learn more about IRA rules.
Roth IRA: Normally set up by individuals and contributions are made with after-tax dollars – meaning that your contributions are not tax deductible. Principal and earnings grow tax free. Unlike traditional IRA contributions, Roth IRA contributions are not tax deductible from your income, but qualified withdrawals are not taxable. Learn more about Roth IRA rules.
Rollover IRA: Opened when you change jobs or retire and “rollover” your retirement account from your previous employer’s qualified retirement plan, usually a 401K plan, a 403b plan, or a TSP plan. Learn more about Rollover IRA rules.
SEP IRA: (Simplified Employee Pension Plan): Most popular choice for self-employed professionals, lawyers, doctors, and small business owners. Unlike a traditional IRA, you can make yearly tax deductible contributions up to 25% (with a maximum) of your income. Learn more about SEP IRA rules.
SIMPLE IRA Plan: Utilized by companies with fewer than 100 employees. A little more complicated than an SEP IRA. Employees can contribute to a SIMPLE IRA and employers must match up to 3% of compensation. Learn more about SIMPLE IRA rules.