Individual Retirement Account

Do you...

  • Want to save beyond your 401(k)?

  • Know the difference between a traditional and a Roth IRA?

Things to consider

An IRA gives you the opportunity to save for a better retirement. Your earnings can grow tax-deferred, and you’ll have flexibility in investment choices not usually found in employer-sponsored plans. To save a little more beyond your 401(k), consider an IRA.

There are two types: traditional IRA and Roth IRA, and there are few ways they differ from each other, including tax implications, age limits, and income caps.

Traditional IRA

  • Contributions can be tax-deductible 
  • Earnings grow tax-deferred 
  • Withdrawals are taxable when distributed 
  • Must be under 70 ½ to contribute 
  • Rollover contributions allowed at any age

Roth IRA

  • Contributions are not tax-deductible 
  • Contributions have potential for tax-free earnings and withdrawals 
  • Rollover contributions allowed at any age 
  • Income caps apply

We can help

For a traditional IRA, contributions can be tax-deductible, and earnings grow tax-deferred. Withdrawals are taxable when distributed. Contributions to a Roth IRA are not deductible, but have the potential for tax-free earnings and withdrawals. To contribute to a traditional IRA, you need to be younger than 70 ½. But you can contribute to a Roth IRA and make rollover contributions to either type regardless of your age.

If your income exceeds a certain limit, you might not be able to contribute to a Roth IRA, or you might only be eligible for reduced contributions. You can contribute to a traditional IRA regardless of your income, but your contributions will be limited to the lesser of $5500 if under age 50, or your earned income for the year. Whether those contributions are deductible depends on your income and other factors.

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*This is a partial listing of Financial Engines’ customers as of December 31, 2017. These companies have consented to disclosure of their relationships with Financial Engines. This does not constitute an endorsement or approval of the advisory service provided. Third-party marks appearing on this site are the property of their respective owners.

*Investment News, RIA Data Center, 2018

*Methodology: InvestmentNews qualified 2,172 firms headquartered in the United States based on data reported on Form ADV to the Securities and Exchange Commission as of May 1, 2018. To qualify, firms must have met the following criteria: (1) latest ADV filing date is either on or after January 1, 2017, (2) total AUM is at least $100M, (3) does not have employees who are registered representatives of a broker-dealer, (4) provided investment advisory services to clients during its most recently completed fiscal year, (5) no more than 50% of amount of regulatory assets under management is attributable to pooled investment vehicles (other than investment companies), (6) no more than 25% of amount of regulatory assets under management is attributable to pension and profit-sharing plans (but not the plan participants), (7) no more than 25% of amount of regulatory assets under management is attributable to corporations or other businesses, (8) does not receive commissions, (9) provides financial planning services, (10) is not actively engaged in business as a broker-dealer (registered or unregistered), (11) is not actively engaged in business as a registered representative of a broker-dealer, (12) has neither a related person who is a broker-dealer/municipal securities dealer/government securities broker or dealer (registered or unregistered) not one who is an insurance company or agency.

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