What is an IRA?

An Individual Retirement Account (IRA) is a tax-advantaged investment tool designed to help you save towards retirement. It allows your money to grow tax-free or on a tax-deferred basis, depending on the IRA type. IRAs are one of the most effective ways to save and invest for the future.

Types of IRAs

Understanding the different types of IRAs gives you the ability to customize your retirement savings strategy to fit your retirement goals. Each IRA type has its own advantages but they all offer tax-advantaged growth of your money while it’s invested.

Determining which IRA is best for your unique situation depends on your age, income, and financial goals. Please consult with your tax advisor for additional details and for help to decide which one is right for you.

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Compare IRAs

Features

Traditional IRA

Roth IRA

Description

  • Tax-deferred retirement savings account
  • Pay taxes on your money only when you make withdrawals in retirement
  • Available through both U.S. Bank and U.S. Bancorp Investments
  • Retirement savings account that grows tax free
  • Fund it with after-tax dollars
  • Available through both U.S. Bank and U.S. Bancorp Investments

Eligibility

  • Under age 70 ½
  • Any age
  • Income thresholds apply

Contribution limits

  • Under age 50: $6,000 per year
  • Over age 50: $7,000 per year
  • Under age 50: $6,000 per year
  • Over age 50: $7,000 per year

Tax benefits

  • Tax-deductible contributions
  • Tax-deferred earnings growth
  • Contributions not tax-deductible
  • Tax-free earnings growth
  • Tax-free withdrawals

Distributions and withdrawals

  • Required minimum distributions start at age 70 ½ distributions are taxed
  • Penalty for withdrawals before age 59½
  • No required minimum distributions
  • Penalty for withdrawals before age 59½

Other IRA types to consider

SEP IRA

  • A tax-deferred retirement plan for anyone who is self-employed, owns a business, employs others or is an independent contractor
  • Contribute up to 25% of compensation for yourself and employees
  • Available through both U.S. Bank and U.S. Bancorp Investments

U.S. Bank Heritage IRA

  • Take advantage of the tax benefits offered by a Traditional or Roth IRA
  • Add the ability to control payments to beneficiaries after your death
  • Available exclusively through U.S. Bank

Want to know more about your IRA options?

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Funding your IRA

401(k) and 403(b) rollover into an IRA

U.S. Bancorp Investments and U.S. Bank make it easy to rollover your employer-sponsored account into your IRA with these two options:

  1. Authorize a rollover transfer from your previous employer’s 401(k) or 403(b) directly into an IRA without penalty or taxes. Some fees may apply.
  2. Request a distribution check payable to you, subject to a 20% federal withholding tax. Roll the amount into an IRA within 60 days to avoid further penalties and taxes.

Transfer an IRA

U.S. Bancorp Investments and U.S. Bank make it easy to transfer your IRA with these two options:

  1. Authorize your current financial services provider to transfer funds from an existing IRA directly into a new IRA. Some fees may apply but you have no limit on number of transfers per year.
  2. Request a rollover distribution check from your existing IRA. Deposit the funds into your new IRA within 60 days to avoid paying income tax and possible penalties. You are limited to one of these rollovers per 12-month period.