Individual Retirement Accounts (IRAs)
Unlike workplace plans, you open an IRA yourself, usually at any brokerage in a few minutes online, and it isn't tied to a specific employer. You don't need a job that offers a retirement plan to get one started. As long as you have earned income, you can open an account today. The 2026 contribution limit is $7,500 ($8,600 if you're 50 or older), shared across every IRA you own.
IRAs are also where money from old workplace plans usually ends up. When you leave a job, rolling a 401(k) or 403(b) into an IRA moves the balance over tax-free and typically gives you a much wider range of investment choices than the old plan did.
Traditional IRA
A tax break now, taxed later
Contributions may be tax-deductible depending on your income and whether you (or your spouse) have access to a workplace retirement plan. If neither of you does, your contribution is always fully deductible. If you do have a workplace plan, the deduction phases out at higher income: for 2026, single filers lose it between $81,000 and $91,000, and married couples filing jointly between $129,000 and $149,000.
Money grows tax-deferred, and withdrawals are taxed as ordinary income at your marginal federal tax bracket, plus any state tax that applies (a handful of states have no income tax). Withdrawing before 59½ generally triggers a 10% penalty, with a handful of exceptions: disability, death, a first-time home purchase, education expenses, certain medical expenses, and health insurance premiums while unemployed (that last one is IRA-only, unavailable for 401(k)s).
Required minimum distributions start at 73, calculated from your account balance and a life-expectancy factor. Missing one carries a steep 25% penalty, reduced to 10% if corrected within two years.
Bottom line
Best when the deduction actually applies to you. Check the income phaseouts before assuming you'll get the tax break.
Roth IRA
Taxed now, tax-free later
Contributions are never deductible, meaning you contribute after-tax money. In exchange, qualified withdrawals (after 59½, once the account has been open 5 years) are completely tax-free, both what you put in and everything it earned. Eligibility phases out at higher income: for 2026, that's between $153,000 and $168,000 for single filers, and between $242,000 and $252,000 for married couples filing jointly. Above those levels you can't contribute directly. There are no required withdrawals, ever, for the original owner.
One of the most useful things about a Roth IRA is that you can withdraw your own contributions (not the earnings, just the amount you put in) at any time, for any reason, with no tax and no penalty, since you already paid tax on that money. Taking out earnings early is a different story: a non-qualified withdrawal of earnings triggers a 10% penalty plus income tax on the earnings portion.
Backdoor Roth IRA
A workaround for high earners who make too much to contribute to a Roth directly. You contribute to a Traditional IRA (non-deductible, since you're over the income limit anyway), then convert that money into a Roth shortly after. It's completely legal and widely used, but there's a catch: if you already have other pre-tax money in a Traditional IRA, the conversion gets taxed proportionally across all of it, which can trigger a bigger tax bill than expected. Worth a closer look, or professional guidance, before trying it.
Bottom line
For younger savers and anyone in a lower tax bracket today than they expect in retirement, the Roth is often the better deal, and its flexibility is unmatched. Not sure which side you land on? Run your numbers in the calculator.
Spousal IRA
Normally you need earned income of your own to contribute to an IRA. A spousal IRA is the exception. If one spouse doesn't work, or earns very little, the working spouse can put up to $7,500 into their own IRA and another $7,500 into a separate IRA for the non-working spouse, all from the one income, as long as the couple files a joint tax return. It can be a Traditional or Roth IRA and follows all the same rules as a regular one. The account legally belongs to the non-working spouse, not the couple jointly, and the arrangement effectively lets a one-income household save in two IRAs instead of one.