Key takeaways

• You can open an IRA at a bank or financial institution, sometimes with $0 minimums, though some require an initial investment to start.
• In 2026, you can contribute up to $7,500 ($8,600 if you are aged 50+) across all your IRAs combined.
• Traditional IRAs offer potential current tax deductions; Roth IRAs offer tax-free qualified withdrawals in retirement and no RMDs at age 73.

An individual retirement account (IRA) is a powerful tool designed to help you save for your future, and opening one can be surprisingly easy.

You can open an IRA online at a variety of institutions, such as a financial services provider, bank, and even mutual fund companies. While many IRAs have no minimum deposits, others may require a specified initial investment.

The sign-up process typically involves providing some basic information — like your name, Social Security number and employment information — and then deciding how to get money into the account. You can make contributions by transferring funds from a bank account or rolling over assets from an existing IRA or  401(k) plan (if eligible to do so).

Read more: How to roll over a 401(k)

1. Select what type of IRA you would like to open

The first step to opening an IRA is to determine what type of account best fits your financial goals. The two most common types of IRAs are traditional IRAs and Roth IRAs.

• Traditional IRAs: Contributions to traditional IRAs are potentially tax deductible. Any growth is tax-deferred, but withdrawals in retirement are taxed. Traditional IRAs also require you to begin making  required minimum distributions (RMDs) beginning at age 73 .1
• Roth IRAs: Contributions to a Roth IRA are not tax-deductible; however, any earnings are tax-free until distributed, and qualified distributions are not subject to federal income tax. Roth IRAs also don’t require you to begin making RMDs as traditional IRAs do.

While most people with earned income can open an IRA, there are income limits with a Roth IRA — and sometimes with a traditional IRA — if you also have a workplace 401(k) plan account. Income limits for a traditional IRA don’t affect your ability to open one, just whether your contributions will be tax deductible.

You might consider a Roth IRA if you expect to be in a higher tax bracket during retirement. For example, if you’re currently young and earning an entry-level salary. You’re also allowed to have both types of IRAs and even multiple traditional or Roth accounts.

Read more: Roth vs. traditional IRA: Which should I choose?

If you’re a non-working spouse, you may be eligible for a spousal IRA, which lets your working spouse open a Roth or traditional IRA in your name.

Even children can have an IRA with an adult custodian. They must report income from work — such as babysitting — and their total contribution is limited to their annual earnings up to $7,500. A Roth IRA can often be a good choice for kids since their income likely puts them in a low- or zero-income tax bracket.

2. Choose a financial institution

Once you’ve decided between a Roth or Traditional IRA, it’s time to choose a financial institution to open your account. IRAs are offered by many types of providers, including banks, investment firms, and mutual fund companies. The sign-up process typically involves providing some basic information — like your name, Social Security number, and employment information.

Some factors to consider when choosing an IRA provider:

• Do they require minimum deposits? While many do not, some financial institutions may require a specified initial investment when opening an IRA.
• What fees are involved in opening and maintaining the account? These may vary depending on the institution and the specific features of the account.
• What account features or benefits are offered? Access to financial advisors, automatic contributions, or integrated retirement planning tools are some features you might consider.
• What investment options are available? IRA providers may vary in the types of investments they offer. Having a wide range of options can be beneficial depending on your financial goals.

3. Contribute to your IRA

You may contribute up to $7,500 to your IRA(s) in 2026 — an increase from $7,000 in 2025 — or 100% of your earned income, whichever is less. Workers age 50 and older may also make a catch-up contribution of $1,100, bringing the total contribution limit to $8,600 for 2026. Rollovers from 401(k)s to IRAs do not count toward the maximum contribution limit for the year.

IRA contributions may be made until the federal tax filing deadline, usually April 15. For the 2026 tax year, you have until April 15, 2027, to make your final IRA contribution.

If you own multiple IRAs, your total contributions made across all accounts must fall within the $7,500 limit – or $8,600 for those 50 years and older. Excess IRA contributions may be subject to a 6% tax each year they remain in the account, unless they are withdrawn before your individual income tax return is due.

You can use tools like the Empower Retirement Planner to see how your contributions align with your retirement goals and track your IRA investment performance over time.

4. Invest your IRA funds

Once you have opened and contributed to your IRA, you need to decide where to invest these funds. For example, within an IRA you can typically invest in stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Along with the tax benefits, flexibility in investment choices is one of the chief advantages of an IRA.

If you’re not comfortable managing investments by yourself, you may consider working with a financial professional or opening an IRA with a financial institution that provides advice or automated investing tools.

Read more: How to start investing: A beginner’s guide to investment basics

FAQs

How much does it cost to open an IRA?

The fees associated with opening an IRA vary depending on the financial institution, the features of the specific account, and how funds will be invested. Some institutions do not require a minimum deposit or fee upon opening the account, yet they may require maintenance or advisor fees depending on the level of support you seek.

Depending on your investment strategy, there may be additional fees associated with trading, expense ratios, and portfolio management.

Is it better to have a 401k or an IRA?

401(k)s and IRAs offer two different avenues for retirement savings. IRAs may be opened and contributed to on your own, while 401(k)s are only available through your employer and may offer employer matching. 401(k)s have higher annual contribution limits, while IRAs typically offer a wider variety of investment options.

Contributing to both a 401(k) and an IRA is also possible. This can be a great way to boost your retirement savings and put even more of your money to work in tax-advantaged accounts.