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IRA

An Individual Retirement Account (IRA) is a self-directed retirement account with tax advantages. Traditional IRAs offer pre-tax contributions (with deductibility phase-outs); Roth IRAs offer tax-free growth with income limits.

By the TRRP Editorial TeamUpdated 2026SSA · IRS · CMS data

Definition

An Individual Retirement Account (IRA) is a self-directed retirement account with tax advantages. Traditional IRAs offer pre-tax contributions (with deductibility phase-outs); Roth IRAs offer tax-free growth with income limits.

Why it matters in retirement

IRAs let you take control of your retirement money — much wider investment selection than most 401(k)s, no plan fees, full flexibility. For rollovers from former employers, an IRA is usually the right destination.

Key numbers · 2026
IRA contribution limit (2026)
$7,500
Age 50+ catch-up
$1,100
Traditional deduction phase-out (MFJ)
$129K–$149K
Roth phase-out (MFJ)
$242K–$252K
Pros
  • Full investment flexibility
  • Lower fees than most 401(k)s
  • Traditional: current tax break
  • Roth: tax-free growth
Cons
  • Lower contribution limits than 401(k)
  • State creditor protection varies
  • RMDs on traditional at 73
  • Roth income limits

Common mistakes

  • Missing the contribution deadline (April 15)
  • Not knowing about backdoor Roth conversions
  • Skipping spousal IRA contributions when one spouse doesn't work
  • Leaving old 401(k)s scattered instead of consolidating
The part most people miss

You can contribute to a non-deductible traditional IRA even above the Roth income limits, then convert it to Roth the same year — the "backdoor Roth." Just watch the pro-rata rule if you have other pre-tax IRA balances.

When you’re ready

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