Traditional IRA
Tax-deductible contributions
- Tax-deductible contributions
- Tax-deferred growth
- $7,000 annual limit (2026)
- $8,000 if age 50+
- Flexible investment options
- Required distributions at 73
Roth IRA
Tax-free retirement income
- Tax-free withdrawals in retirement
- After-tax contributions
- $7,000 annual limit (2026)
- $8,000 if age 50+
- No required distributions
- Income limits apply
SEP IRA
For self-employed & small business
- Higher contribution limits
- Up to 25% of compensation
- $69,000 max for 2026
- Easy to set up & maintain
- Tax-deductible contributions
- Ideal for self-employed
IRA Comparison Guide
| Feature | Traditional IRA | Roth IRA | SEP IRA |
|---|---|---|---|
| Tax Treatment | Tax-deductible contributions, taxed at withdrawal | After-tax contributions, tax-free withdrawals | Tax-deductible contributions, taxed at withdrawal |
| 2026 Contribution Limit | $7,000 ($8,000 if 50+) | $7,000 ($8,000 if 50+) | Lesser of 25% of compensation or $69,000 |
| Income Limits | None for contributions | Yes - phase-out applies | None |
| Required Distributions | Yes, starting at age 73 | No RMDs during owner's lifetime | Yes, starting at age 73 |
| Early Withdrawal Penalty | 10% before age 59½ (exceptions apply) | 10% on earnings before 59½ (contributions anytime) | 10% before age 59½ (exceptions apply) |
| Best For | Current tax deduction needed | Tax-free retirement income desired | Self-employed & small business owners |