Individual Retirement Accounts (IRAs)

Individual retirement accounts (IRAs) are tax-advantaged retirement savings vehicles that you can set up yourself. Traditional, SEP, and SIMPLE (the only employer-established one) IRAs let you deduct contributions; Roth IRAs give you tax-free income; and all types let your investments grow tax-free until you withdraw them.

Frequently Asked Questions
  • Can I buy real estate in my IRA?

    Yes, you can, but only if you have a self-directed IRA (SDIRA). The real estate has to be for investment purposes, not personal use by you or family members. It can include single-family or multiple dwellings, apartment buildings and all kinds of commercial properties, as well as raw land. There are complex rules to follow; your IRA could be disqualified if you violate them.

  • How do IRA rollovers work?

    These transfers of funds from a retirement plan such as a 401(k) to an IRA require moving the assets either through direct transfer from custodian to custodian, or by liquidating the retirement account and sending you a check or direct deposit to a bank account (indirect rollover). Given stringent rules to keep rollovers tax free, a direct rollover is the better approach.

  • When can you withdraw from an IRA tax free?

    The only time you can withdraw from an IRA without paying taxes is when you’re withdrawing funds from a Roth IRA. Even with a Roth, until you are 59½ you owe taxes and a penalty on withdrawals of Roth earnings (but not contributions). It’s important to learn the rules to minimize early withdrawal penalties, as well as taxes.

  • How can I borrow from my IRA without paying a penalty?

    You can withdraw money from an IRA but not borrow from one. However, there is a special way that what amounts to a short-term loan is permitted. What you do is withdraw the money from an IRA account and repay it to either the same account or another qualified account within 60 days. This is technically not a loan, but a distribution followed by a rollover. Generally, you can do this type of rollover only once in a 12-month period.

  • Can I donate money from my IRA to charity?

    Yes, you can. And, if you’re taking money from an IRA on which you pay taxes on withdrawals (traditional, SEP, SIMPLE–but not Roth) there’s a tax benefit if you wait until you’re 70½ and withdraw IRA funds as a qualified charitable distribution (QCD). Even better, once you’re 72 and taking required minimum distributions (RMDs) from those accounts (again, not required from a Roth), your QCDs count toward your RMDs.That means you can take out less RMD money and owe less in taxes as a result. The recipient must be a qualified charitable organization. You can also make a charity a beneficiary of an IRA.

  • Can I add money to my IRA after I retire?

    It depends on how retired you are. If you are doing no work that qualifies as earned income, you can no longer add money to an IRA. However, if you are working part-time or have earnings from self-employment projects, those qualify. Investment, rental or pension income does not qualify as money you can add to an IRA.

Key Terms

Explore IRAs

Two stacks of money
How to Make an IRA Contribution As a Gift
Female financial advisor in discussion with client about Self-Directed IRA Companies
Best Self-Directed IRA Companies
401(k) and IRA contribution limits
401(k) vs. IRA Contribution Limits
How Much Are Taxes on an IRA Withdrawal?
SIMPLE IRA vs. SIMPLE 401(k): Knowing the Difference
A piggy bank with Rollover IRA written on it
IRA Rollover: Overview, Types, Special Considerations
Senior father and adult son hugging and smiling on a beach
9 Things You May Not Know About Your IRA
Who Offers IRA Accounts With No Minimum Deposit?
Group of friends smiling and having fun
The Best IRA for a 20-Something Investor
Stretch IRA
Stretch IRA: What it is, How it Works, Example
Retirement plans for after work is done.
Keogh vs. IRA: What's the Difference?
A couple going through their finances while sitting at the dining room table.
Choosing IRA Accounts: The Best Guide for Beginners
Inherited IRA Distributions and Taxes: Getting It Right
nest egg with money showing
Taking Money Out of an IRA Early
IRA vs. Certificate of Deposit: What's the Difference?
Business owner and employees
Simplified Employee Pension (SEP) IRA: What It Is, How It Works
The Next Numbers Are as Follows
Form 8606: Nondeductible IRAs
Elderly couple sitting on a sailboat in a large lake
Traditional vs. Roth vs. SEP IRA: Differences?
Should You Draw From Your IRA Early?
Silver-haired man reading newspaper
IRA vs. Annuity: What's the Difference?
Should You Contribute to a Non-Deductible IRA?
Bitcoin IRA Definition
How Does a Simplified Employee Pension (SEP) IRA Work?
Learn the Rules of Substantially Equal Periodic Payment (SEPP)
Finding a Custodian for a Self-Directed IRA
IRA tag
Can I Use My IRA to Pay for My College Loans?
Using Your IRA to Pay Off Credit Card Debt
How Does an IRA Grow Over Time?
Understanding a Traditional IRA vs. Other Retirement Accounts
How Are Dividends in IRAs Taxed?
Senior Business Woman Using Laptop and Tablet in Office
IRA Contributions: Eligibility and Deadlines
Businessperson in an office on a video call using a laptop
What Are Examples of the Most Common Types of Investments in an IRA?
A hand placing a wood block that says trust
How Can I Put My IRA In a Trust?
Individual Retirement Accounts written on a paper.
Common IRA Rollover Mistakes
What Is a Spousal IRA? Definition, How It Works, and Contributions
Traditional IRA Deductibility Limits
Table with cash, a calculator, and a jar labeled IRA on it
5-Year Rule: Definition for Roth, Traditional, and Inherited IRAs
Senior couple looking confused while working on finances at home
Is My IRA or Roth IRA FDIC-Insured?
Bank vault
Inherited IRA: Definition and Tax Rules for Spouses and Non-Spouses
IRA road sign design
How Converting to a Roth IRA Can Affect Taxes
Roth IRA conversion
Converting Traditional IRA Savings to a Roth IRA
Business Owners: How to Set up a SEP IRA
IRS Publication 590-B: Distribution from IRAs
If I Start a Limited Liability Company (LLC), Can I Open a SEP IRA?
Can I Own Master Limited Partnerships (MLPs) in My Roth IRA?
close up of man hand analyzing stock market chart
Using Your IRA to Buy Real Estate
How to Pick the Right Bonds for Your IRA
Senior couple slow dancing on a wooden deck with forests in the background.
SIMPLE IRA vs. Traditional IRA: What's the Difference?
Elderly couple hugging each other outdoors
Can a Simplified Employee Pension (SEP) Be Converted to a Roth IRA?
Tiny package
Donating to Charity Using Money From an IRA
IRA Contributions: Deductions and Tax Credits
Can I Roll My SEP IRA Into a Traditional IRA, or Convert to a Roth?
Can You Deduct Your IRA Contributions?
Elder couple taking a kayak out of the back of their car by a lake
How to Manage a Simplified Employee (SEP) IRA Plan
Can You Roll Over a 403(b) to an IRA If You Are No Longer Employed?
Elderly couple standing together
Benefits of a SIMPLE IRA
Calculator and Tax Forms
IRS Publication 590-A
Couple on beach.
Can IRAs Be Held Jointly by Spouses?
Financial advisor with digital tablet meeting with family in kitchen
Designating a Minor as an IRA Beneficiary
Young couple calculates monthly expenses at home
4 Basic Facts to Know About IRAs