Individual Retirement Account

An individual retirement account (IRA) is designed to allow individuals to save money for retirement in a tax-advantaged way.
An IRA is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis. There are three main types of IRAs—Traditional, Roth, and Rollover—each with different advantages.
  • Traditional IRA - allows you to make contributions with money that can typically be deducted from annual taxes owed, and any earnings can potentially grow (tax-deferred) until withdrawn in retirement.  Many retirees are in a lower tax bracket than they were working, so the tax-deferral means the money may be taxed at a lower rate when it is withdrawn in retirement.
  • Roth IRA - you make contributions with after-tax dollars.  This is designed to allow your money to grow tax-free, and allows for tax-free withdrawals in retirement.
  • Rollover IRA - is a Traditional IRA intended for money “rolled over” from a qualified retirement plan. Rollovers involve moving eligible assets from an employer-sponsored plan, such as a 401(k) or 403(b), into an IRA.
  • Beneficiary IRA, or Inherited IRA - is something that may be passed from IRA account owner to one or several beneficiaries (Spouse, Non-Spouse, Charity, or Trust) when they die.  This type of an IRA may allow the account owner to pass more money to their heirs and also enable beneficiaries to divert income tax on most of their inheritance for years.  
When establishing an IRA, whether you choose a Traditional or Roth, the tax benefits allow your savings to potentially grow, or compound, more quickly than in a taxable account. Our calculators can help you determine an appropriate option.
Why invest in an IRA?
Many financial experts estimate that you may need up to 85% of your pre-retirement income in retirement. An employer-sponsored savings plan, such as a 401(k), might not be enough to accumulate the savings you need. Fortunately, you can contribute to both a 401(k) and an IRA. An Equity Institutional IRA can help you:
  • Supplement your current savings in your employer-sponsored retirement plan.
  • Gain access to a potentially wider range of investment choices (including alternative investments) than your employer-sponsored plan.
  • Take advantage of potential tax-deferred or tax-free growth.
It is recommended that you try to contribute the maximum allowable amount to your IRA each year in order to get the most benefit out of compounding interest from these savings. Be sure to review your investments at least annually, making adjustments as needed, especially as you near retirement and your goals and risk tolerance change.