Can I Open an IRA at My Local Bank?
An individual retirement account (IRA) provides an effective and tax-efficient means of saving for retirement, with access to bank, robo-advisors, and brokerage companies across the US and a selection of investment options such as low-cost index funds and ETFs.
Compare fees, minimums and features when searching for an IRA provider that best meets your needs.
What is an IRA?
Individual retirement accounts (IRAs) provide tax-advantaged savings vehicles for your future. With them, you can invest in mutual funds, ETFs and stocks – whether self-managing them yourself or having them managed professionally – depending on your investment strategy and needs. Finding an IRA provider who offers features tailored specifically to you could make all the difference to your retirement success!
Traditional and Roth Individual Retirement Arrangements (IRAs). In a traditional IRA, contributions are pretax and you must pay taxes when withdrawing them in retirement; while with a Roth IRA contributions are made with after-tax money and withdrawals are tax-free.
Specialty IRAs such as SEP IRAs for small business owners or SIMPLE IRAs for employees can also be opened, along with spousal IRAs which combine assets from working and nonworking spouses. Each type of IRA has different annual contribution limits set by the IRS which vary year to year.
How do I open an IRA?
Individual retirement accounts are offered by banks, brokerage firms, and robo-advisors alike. You should compare management fees and commissions, minimum opening requirements and educational resources before selecting an IRA provider that’s the best fit for you. Remember that returns depend on which type of investments are chosen: safer assets like CDs may provide lower returns while more volatile stocks can potentially yield greater results.
Just follow these three easy steps online to open an IRA: Entering your personal details, connecting your bank account, and funding it with your initial deposit. Some providers also provide easy transfers from existing accounts into new IRA accounts; some accounts require low or no minimum deposits while others have minimum investment amounts; there are even SEP IRAs designed specifically for self-employed individuals (SEP IRA) and SIMPLE IRAs specifically created to sponsor employee IRA accounts (SIMPLE IRA). If you have questions, consult with a tax professional.
How do I transfer an IRA?
If your current IRA provider offers lower fees or better investment options, but you would like a change, it may be worthwhile considering moving your account elsewhere. This can be accomplished either directly between trustees, or via an indirect rollover whereby your old account management institution will issue you a check and you must deposit in your new IRA within 60 days or incur penalties and taxes.
Your bank likely doesn’t offer other investments besides certificates of deposit for an IRA; however, other institutions do, including no-load mutual fund firms, online brokerages and even robo-advisors. Investing this way may be more affordable and can yield greater returns than CDs; though it is important to keep within IRS limits on annual contributions (currently $6500 for traditional and $15500 for SEP/SIMPLE IRAs in 2023). Also ensure the institution provides an IRA covered by FDIC insurance.
How do I withdraw an IRA?
An individual retirement account (IRA) is a tax-advantaged investment account that helps individuals save for the future tax-free. While banks typically offer these accounts, anyone can open one through various brokerage firms, robo-advisors and financial institutions.
An IRA’s growth is typically tax-deferred until it’s withdrawn during retirement or at age 59 1/2, but early withdrawal can incur a 10% penalty in addition to any taxes you owe, unless one of several IRS exceptions such as buying your first home or funding higher education apply.
Banks offer traditional, Roth, SIMPLE and backdoor Roth IRAs (spousal IRAs). Each type of IRA has different rules and restrictions, so you should consult with a professional before selecting the option that is right for you.