Individual Retirement Accounts
An individual retirement account (IRA) is a tax-advantaged account that helps you save for retirement. The contributions you make to your IRA can be invested in a variety of ways, including annuities, mutual funds, interval funds, stocks and bonds.
There are two types of IRAs – traditional and Roth. Learn more about each type, the benefits of a rollover and what is right for you.
When you put money in a traditional IRA, your contributions may be tax-deductible, plus any growth in your account is tax-deferred.3 You can access your money for any reason, including to pay for certain things, like a first home or educational expenses.2
With a Roth IRA, the money you put into your account is after-tax dollars. And because you've already paid taxes on the money you've put in, you won't have to worry about taxes when you withdraw it.4 Use our Roth IRA calculator to find out how much you could save before you retire.
Differences between a traditional & Roth IRA
Which one is right for you?
|A traditional IRA, if you:||A Roth IRA, if you:|
|Are under 70½ years old and you or your spouse are not currently covered by an employer-sponsored retirement plan.6||Have a 2018 modified adjusted gross income (MAGI)6 less than:
|Currently have earned income.||Currently have earned income.|
|Think you may be in a lower tax bracket in retirement.||Think you may be in a higher tax bracket in retirement.|
|Don't think you'll need to take money out of your account until retirement.||Want the flexibility to take money out whenever you want and for any reason.
|Want or need to start withdrawing from your account between ages 59½ and 70½.||Want your account to have growth potential as long as possible without being required to start withdrawals at a certain age.|
|Would benefit from a potential immediate federal income tax deduction.||Would benefit from qualified distributions that are free from federal income tax in the future.|
4 reasons to consider an IRA rollover
A rollover is the process of moving your retirement assets, such as multiple 401(k) plans, into a single account. Most rollovers occur when people change jobs or retire. By rolling assets into an IRA, you can continue saving for the future while your money has the potential to grow tax-deferred.7
- Earnings are tax-deferred until withdrawn.
- Provides broader investment opportunities.
- Combines multiple accounts into one.
- You can move money without paying taxes or penalties.
What's the best time for a rollover?
"I know when we complete the planning for our retirement, I'm going to feel very confident. There's not going to be any surprises 20 years down the road."*
* The member's experience may not be the same as other members' and does not indicate future performance or success.
There may be benefits to leaving your account in your employer plan, if allowed. You will continue to benefit from tax deferral, there may be investment options unique to your plan, there is a possibility for loans, and distributions are penalty-free if you terminate service at age 55+.
Thrivent Financial and its representatives and employees cannot provide legal, accounting, or tax advice or services. Work with your Thrivent Financial representative and, as appropriate, your attorney and tax professional for additional information.
Some states have not yet adopted the federal rules governing the tax treatment of Roth IRAs and there may be conflicts between federal and state tax treatment of IRA conversions. Consult your tax professional for your state's tax rules.
1 According to Statistic Brain Research Institute (Link opens in new window), using U.S. Census Bureau information dated May 2013.
2 Taxes and early withdrawal penalties may apply unless the distribution meets a penalty exception.
3 Income thresholds apply if you or your spouse participates in an employer-sponsored retirement plan.
4 After-tax contributions are withdrawn tax-free, no penalty applies. Conversions withdrawn within the first five years are subject to the 10% penalty unless the distribution meets one of the penalty exceptions.
5 Distribution of earnings are tax-free as long as your Roth IRA is at least five years old and one of the following requirements is met: 1) you are at least age 59½; 2) you are disabled; 3) you are purchasing your first home ($10,000 lifetime maximum); or 4) the money is being paid to a beneficiary.
6 Roth IRA: Contribution is reduced if MAGI is between $122,000 and $137,000 on a single return and $193,000 and $203,000 on a joint return. If you are a married taxpayer who files separately, consult your tax advisor.
Traditional IRA: If you are an active participant in an employer retirement plan, the amount of your contribution that's tax deductible is reduced if MAGI is between $64,000 and $74,000 on a single return and $103,000 and $123,000 on a joint return. If you're married filing jointly and you're an active participant in an employer retirement plan and your spouse is not, deduction for your spouse's contribution is phased out if MAGI is between $193,000 and $203,000. If you are a married taxpayer who files separately, consult your tax advisor.
7 There may be benefits to leaving your account in your employer plan, if allowed. You will continue to benefit from tax deferral, there may be investment options unique to your plan, there is a possibility for loans, and distributions are penalty-free if you terminate service at age 55 or older.