If your money is in an IRA savings account, the answer is no – there’s essentially no risk of losing your money. Bank and credit union savings accounts are federally insured for up to $250,000 per account, and if you have more than that amount you can open more than one account. However, if your money is in an IRA investment account, it’s typically invested in the stock or bond market. Those assets can go down value, causing you to lose money.
You don’t have to choose one or the other: even if you have a 401(k) plan through work, you may be able to put extra money aside in an IRA. However, with an IRA all the funds invested in the account come out of your pocket. 401(k) plans are sponsored by employers, and many companies try to encourage employee participation with “matching contributions”: they put in a dollar for every dollar the employee puts in up to a certain threshold (e.g., up to 3% of the employee’s salary). If your company offers matching contributions, you should take maximum advantage of that before putting your money into an IRA – otherwise, you’re leaving money on the table.
No. An IRA stands for Individual Retirement Account because it’s something you set up and contribute to as an individual. 401(k) retirement accounts are “sponsored” or set up by employers as a benefit plan for their employees. They are responsible for keep records and administering the plan, and they give employees a set of options for investing contributions. Many employers also offer matching contributions to encourage workers to contribute to their 401(k) plan. Another difference: contributions to employer-sponsored plans are tax-deductible, but contributions to some IRAs -- specifically Roth IRAs -- are not tax deductible.
If you earn money, pay taxes, and want to save money to live on in retirement, individual retirement accounts can help you do so by providing valuable tax benefits. With a Traditional IRA you save income taxes up front because funds you contribute are pre-tax: when you put $6,500 in an IRA, your taxable income by $6,500. If you’re in a 30% tax bracket, that lowers your tax bill by $1,800. Money grows in the account tax-deferred, and you only pay income taxes as you take distributions in retirement. At that point, you’re likely to be in a lower income tax bracket. If you think you’ll be in a higher tax bracket, you can put money into a Roth IRA: the money is taxed up front, but you get tax free withdrawals.
Like most of our savings options, IRA accounts have $0 monthly maintenance fees if enrolled in eStatements. If not, there is a monthly fee of $2 for paper statements.4
There’s no minimum opening deposit and no minimum monthly balance. our IRA Accumulator Savings and IRA Money Manager accounts have no minimum deposit or balance requirements. Our high-yield IRA Certificate accounts require a minimum $500 balance.