Types of Individual Retirement Accounts

Individual retirement accounts (IRAs) allow you to save for your future outside of an employer-provided retirement plan and offer specific tax advantages.

Finding the appropriate type of IRA account can be challenging. Contributions should either go towards traditional or Roth accounts depending on what your projected tax bracket in retirement will look like.

Traditional IRA

Traditional IRAs provide you with an individual retirement account that enables tax-deferred investment growth over time. This type of account can contain almost any investment type imaginable – bonds, mutual funds and exchange-traded funds can all be included here. In general, earned income must be present to make contributions; however self-directed accounts that allow more risky assets (like real estate) could also be an option.

As soon as you withdraw money from an IRA, any earnings–capital gains and dividends–are subject to taxes since their deferral was deferred when making your contributions.

Based on your current income and retirement tax bracket, a traditional IRA might be the right option for you. Whatever decision is made, starting early to take advantage of compound growth is vital; additionally, minimum withdrawals must begin after age 73.

Roth IRA

Roth IRAs offer tax benefits that make them especially suitable for 20-something savers, who typically fall within lower tax brackets than older, higher income earners would. Furthermore, with plenty of time until retirement approaches and tax-free distributions helping their investments flourish even further, a Roth IRA could make financial sense.

Simplified Employee Pension plans offer another alternative for small business owners and self-employed people seeking an employer-sponsored retirement account for themselves and their employees. Contribution limits are similar to Traditional IRAs; however, contributions will be taxed according to regular income tax rates instead of capital gains rates.

E*TRADE provides several Roth IRA features that may interest investors, such as no trading fees for online stock, ETF and mutual fund trades. You may also choose from growth stocks and funds which aim to beat the market rather than simply replicate it. Be wary of hidden fees charged by robo-advisors/alternative investment platforms or account closing fees; be wary.


Simplified Employee Pension plans are perfect for small businesses and self-employed people, offering tax-deductibility and annual contribution options allowing business owners to save for retirement with an easy, tax-efficient solution that’s more flexible than 401(k).

An effective SEP provider should make the process effortless for you and help guide you through all the rules and regulations involved in investing. Look for one with low fees, a wide variety of investments and chat/email support so your questions can be quickly addressed.

An Employee Stock Ownership Plan (ESOP) is another form of company-sponsored retirement plan, where employees receive shares in their employer’s stock as part of their compensation package. These shares are then held within a company marketplace where they can be sold at market value when an employee leaves or retires; or reinvested back into it to grow over time.


When you’re ready to begin saving for retirement, an individual retirement account (IRA) can be an ideal solution. But with so many types of accounts and restrictions regarding when and how you can withdraw your money, it can be daunting knowing where to start.

Traditional IRAs allow you to invest your income tax-deferred and even receive tax deductions on qualifying contributions.

Simplified Employee Pension (SEP) IRAs enable business owners and self-employed individuals to make retirement contributions on behalf of themselves and any employees they employ, without incurring too many setup or administrative costs. They’re an ideal solution for small businesses that seek an easy retirement solution with minimum costs for setup.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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