When it comes to building a strong financial future, your workplace retirement plan is a great start—but it’s not the only tool available. An IRA can help you save even more, with flexible options and tax advantages that could make a big difference over time.
In this article, we’ll break down why an IRA is worth considering and how to know if one fits into your personal retirement strategy.
Let’s start with the basics.
What is an IRA?
An Individual Retirement Account (IRA) is a powerful, tax-advantaged way to grow your retirement savings. Think of it as a personal savings vehicle designed to help your money work harder for your future.
There are two main types of IRAs, each with unique benefits: the Traditional IRA and the Roth IRA.
Traditional IRA
A Traditional IRA lets you make tax-free contributions, allowing you to reduce your taxable income today. In other words, you’re not taxed on those contributions, which means more money stays in your pocket. But keep in mind, when you withdraw funds in retirement, those dollars will be taxed as ordinary income.
A few things to note:
- If you withdraw before age 59 ½, there’s usually a 10% penalty (unless you qualify for certain exceptions).
- At age 73, the IRS requires you to start taking minimum distributions, whether you need the money or not.
- There are no income limits to contribute, making this an option for everyone.
Who it’s great for: People who’d rather get a tax break now and expect to be in a lower tax bracket later.
Roth IRA
A Roth IRA works the opposite way: you pay taxes on your contributions now, but your money grows tax-free—and you won’t owe taxes on withdrawals in retirement (as long as the account’s been open for at least 5 years).
A few things to note:
- No required minimum distributions—you can leave the money in as long as you like.
- Some exceptions to early withdrawal penalties exist (like for first-time home purchases or certain medical expenses).
- Roth IRAs are designed for those within certain income ranges. In 2025, contributions begin to phase out if you earn over $150,000 (single) or $236,000 (married filing jointly).
Who it’s great for: Those who want tax-free income in retirement and more flexibility around when and how they withdraw funds.
Who is eligible to contribute to an IRA?
Good news—most people can! The eligibility rules for contributing to an IRA are simple and flexible, making it an accessible savings tool for many.
Here’s what you need to know:
- You (or your spouse) just need to have taxable income—things like wages, salary, or self-employment earnings all count.
- What doesn’t count? Passive income, like rental income or investment gains, won’t qualify for IRA contributions.
- If you choose a Traditional IRA, there is an income limit.
That’s really it! If you’re earning income and looking for a smart way to set aside money for your future, an IRA could be a great fit.
Benefits of an IRA
We’ve already touched on some of the standout perks—like no required minimum distributions for Roth IRAs and no income limits for Traditional IRAs. But there’s even more to love about adding an IRA to your retirement savings strategy. Here are some more benefits:
More control over your retirement savings
Your employer’s retirement plan is a great foundation, and it’s a good idea to maximize your company retirement plan before investing in another plan—especially if your company offers a match (always grab that free money).
While employer plans are great, they often come with pre-selected investment choices. This means that your investment options are limited to the investments that they offer.
With an IRA, you’re in the driver’s seat. You can choose from a wide variety of investments—stocks, bonds, mutual funds, ETFs—and build a portfolio that matches your goals, values, and comfort level.
Additional retirement savings beyond your workplace plan
If you can contribute to an IRA on top of your company retirement plan, do it. Since 401(k)/403(b)s have contribution limits, you can contribute to an IRA once you reach that limit. It’s a great way to supercharge your retirement savings.
Plus, contributing to both gives you the power of diversification—spreading your funds across different accounts and investment types to reduce overall risk and potentially improve long-term returns.
A backup plan if you change jobs
What happens if you quit your job? Some companies have rules that force out small retirement account balances (under $7,000) when you leave. But if you’ve already got an IRA set up, rolling over those funds is simple—and keeps your savings working for you without tax penalties or headaches.
What next?
If you’re ready for a retirement plan that gives you more freedom and flexibility, the TruthPoint IRA could be a great fit. You’ll have more control over how and when you invest and access to a wide range of investment options (including values-based choices), competitive fees, and the tax advantages you’re looking for. And if you have other IRAs, consider consolidating them into one the TruthPoint IRA. It’s easier to manage and might have lower fees.
Remember, you don’t have to figure this out alone. If you have questions or just want to talk through your options, we’re always here to help. Give us a call anytime!