As an investor, understanding individual retirement accounts (IRAs) is critical for managing your portfolio and planning for the future. With several types of IRAs available, each with unique rules, benefits, and limitations, it’s important to have updated, detailed information before you decide which account suits your retirement strategy.
This blog explains the IRA, its types, where you can open one, and what it holds.
An IRA is a tax-advantaged personal retirement savings account that you can establish independently, without relying on an employer-sponsored plan.
Depending on the type of IRA, your contribution may be made with pre-tax or after-tax dollars., The IRS sets annual limits, income eligibility thresholds, and distribution rules. You can open IRAs through banks, brokerages, or robo-advisors, and customize your investment choices.
In a standard IRA (Traditional, Roth, SEP, or SIMPLE), your custodian typically allows:
Certain self-directed IRAs (SDIRAs) may also allow:
As per IRC Section 408(a)(3), you cannot hold:
There are seven main types of IRA, each suited to a different tax situation or retirement goal.
Let us learn more about each IRA type in detail.
A Traditional IRA allows you to contribute pre-tax or after-tax dollars. Your contributions may be tax-deductible, subject to your income, tax-filing status, and whether you (or your spouse) are covered by an employer retirement plan.
You can open a Traditional IRA through Public.com and invest in assets such as stocks, ETFs, U.S. Treasuries, and bonds. Your IRA appears alongside your other Public holdings in a single dashboard, making it easier to view your investments in one place.
A Roth IRA lets you contribute after-tax dollars, meaning you don’t get a tax deduction upfront. However, qualified withdrawals in retirement, including your earnings, are generally tax-free.
You can open a Roth IRA with Public.com and invest in a variety of asset types. You can track your Roth IRA performance alongside other Public accounts for a unified view.
If you’re self-employed or own a small business, a SEP IRA gives you a way to make large, tax-deferred contributions for yourself and your employees.
A SIMPLE IRA allows you and your employer both to contribute towards your retirement savings.
A Rollover IRA lets you move money from an old workplace plan (such as a 401(k)) into an IRA without paying taxes if done correctly. Once rolled over, your account follows Traditional IRA rules.
A Self-Directed IRA lets you hold alternative assets not typically available in standard IRAs.
A Custodial IRA lets you open and manage an IRA on behalf of a minor with earned income and you(adult) manage the account until the child approaches the age of 18.
You can open an IRA through brokerage platforms like Public.com or via banks, credit unions, and mutual fund companies.
Through Public, you are able to:
| IRA Type | Contribution Limit (<50/50+) | Income Limit | Tax Deductible | Tax Treatment | RMD Required? | Notes |
| Traditional | $7,000/$8,000 | None (contribute); deductibility phases out at higher incomes | Yes, if eligible | Tax-deferred | Yes, age 73 | Deductibility phases out if covered by a plan |
| Roth | $7,000/$8,000 | Yes: full under $150,000 (single) or $236,000 (joint); phased out above | No | Tax-free withdrawals | No | Income-based contribution limits |
| SEP | Up to $70,000 | Employer/self-employed | Employer only | Tax-deferred | Yes | Higher limits for self-employed |
| SIMPLE | $16,500/$19,500/21,750 (60–63) | N/A | Employee & employer | Tax-deferred | Yes | Catch-ups higher at 60–63 |
| Rollover | Matches IRA type | N/A | N/A | Matches IRA type | Matches IRA type | From workplace plans |
| Self-Directed | $7,000/$8,000 | See IRA type | See IRA type | See IRA type | See IRA type | Alternative assets allowed |
| Custodial | Up to $7,000 or earned income | N/A | See IRA type | See IRA type | See IRA type | For minors, custodian manages |
Retirement savings can be managed through various types of IRAs, such as Traditional, Roth, SEP, and SIMPLE. This guide explains specific contribution limits and eligibility requirements for each type.
Knowing these distinctions may help you align your choice with your financial plan while staying within current regulations. Rules can change annually, so reviewing the latest IRS updates before making decisions is important.
No, you cannot directly merge or combine a traditional IRA with a 401(k) into a single account. However, the IRS does allow you to roll over funds from a 401(k) into a traditional IRA, or in some cases, roll traditional IRA funds into a current employer’s 401(k) plan if the plan allows it.
No, you cannot borrow money or take a loan from any type of IRA. However, you can use the 60-day rollover rule to temporarily access funds if you redeposit the full amount within 60 days.
The tax-advantaged status of an IRA can be lost if you engage in a prohibited transaction, such as using IRA assets for personal benefit or transacting with disqualified persons. If a prohibited transaction occurs, the IRA generally loses its tax-exempt status, and the entire balance may become taxable.
You can own multiple IRAs, traditional, Roth, SEP, or SIMPLE, but your total annual contributions cannot exceed the IRS limits across all accounts.
Yes, you can contribute to both types in the same year if you meet eligibility requirements. The combined contributions to all your IRAs cannot exceed $7,000 (or $8,000 if age 50+) for 2025.
Form 5498 is the official document that reports your IRA contributions to the IRS. Your IRA custodian sends this form to both you and the IRS by May 31 following the contribution year, and you should keep it for your records.
