when you reach age 59 you can withdraw from the account without incurring any income taxes on your withdrawals roth iras do not have rmds if you don t need the money you don t have to take it out of your account and worry about penalties for failing to do so you can also pass the money to your heirs if you don t end up needing to use it 1718
roth ira contributions are the same as traditional iras 6 500 unless you are 50 or older and can qualify for the catch up contribution which raises the limit to 7 500 in 2023 7 000 and 8 000 respectively in 2024 the catch is that not everyone qualifies to contribute to a roth ira there are income limitations with contributions gradually phased out as your magi increases 197if you earn above those amounts you can t contribute to a roth at all simple iras and sep iras are benefit plans instituted by an employer so individuals cannot open them although self employed or sole proprietors may generally these iras function similarly to traditional iras but they have higher contribution limits and may allow for company matching 21a simplified employee pension sep or sep ira is a retirement plan that an employer or self employed individual can establish the employer is allowed a tax deduction for contributions made to the sep plan and makes contributions to each eligible employee s sep ira on a discretionary basis fundamentally a sep ira can be considered a traditional ira with the ability to receive employer contributions one major benefit it offers employees is those employer contributions are vested immediately 22a simple ira is a retirement savings plan that can be used by most small businesses with 100 or fewer employees simple stands for savings incentive match plan for employees employers can choose to make a 2 retirement account contribution to all employees or an optional matching contribution of up to 3 23employees can contribute a maximum of 15 500 annually in 2023 16 000 for 2024 the maximum is increased periodically to account for inflation retirement savers age 50 and older may make an additional catch up contribution of 3 500 bringing their annual maximum to 19 000 in 2023 the catch up contribution for 2024 is also 3 500 bringing the total contribution amount to 19 500 2425opening a traditional irayou can open a traditional ira as long as you received taxable compensation during the year you want to contribute or your spouse earned taxable compensation and you will file a joint return if both you and your spouse have compensation both parties can open their own traditional ira a variety of organizations financial institutions or brokerage firms can assist in setting up a personal traditional ira the account is subject to irs code requirements and the custodian of your account often the brokerage firm you choose such as fidelity or vanguard will manage the account requirements on your behalf contributions into a traditional ira can be made immediately through your account holder in the form of cash check or money order physical property is not an allowable contribution type when setting up an account there is no minimum balance or starting investment required 26