Salary FYI

IRA (Individual Retirement Account)

Benefits

A US tax-advantaged personal retirement account that individuals can open independently of an employer, available in Traditional (pre-tax) and Roth (after-tax) versions.

## IRA (Individual Retirement Account)

An IRA is a personal retirement savings account with tax advantages. Unlike a 401(k), an IRA is opened by the individual, not through an employer.

### Types and Limits (2025)

| Type | Annual Limit | Tax Treatment |
|------|-------------|---------------|
| Traditional IRA | $7,000 ($8,000 if 50+) | Deductible contributions, taxable withdrawals |
| Roth IRA | $7,000 ($8,000 if 50+) | After-tax contributions, tax-free withdrawals |
| SEP IRA | Up to $70,000 | Self-employed/small business |

### Income Phase-Outs (Roth IRA, 2025)

- Single: $150,000–$165,000 MAGI.
- Married Filing Jointly: $236,000–$246,000 MAGI.
- Above these limits: Backdoor Roth conversion is available.

### IRA vs. 401(k)

| Feature | IRA | 401(k) |
|---------|-----|--------|
| Annual limit | $7,000 | $23,500 |
| Employer match | No | Often yes |
| Investment choices | Unlimited | Plan-specific |
| Who opens it | Individual | Employer |