Shrink Your Taxes. Grow Your Retirement.

Learn how an IRA can help you do both — in just minutes.

Why open an individual retirement account (IRA)? There are numerous reasons, but here are two of our favorites.

1. Save on taxes

Because contributions to an IRA are tax-deductible, an IRA can trim your tax bill — all the way up to tax day itself.

So how does this work? Assuming you meet the eligibility requirements — see the table below for an overview and our full page on these limits — IRA contributions reduce your taxable income. Say you earn $57,000 a year, and you decide to contribute $5,500 to an IRA. Your taxable income for that year drops to $51,500. That, in turn, reduces your tax bill by about $1,300.*

Maybe the best part: You can lower your tax bill all the way up to the day you file your return, simply by opening and contributing to an IRA.

*Assumes a single filer age 49 or younger earning the median U.S. household income of $57,617 and paying a marginal income tax rate of 25%. Results will vary depending on your specific financial situation. See the table below for some general guidelines on IRA eligibility.

Traditional IRA deduction limits for 2017

Filing status	2017 modified AGI	Tax deduction
Married filing jointly or qualifying widow or widower	If you're covered by a workplace retirement plan: Less than $99,000 If your spouse is covered: Less than $186,000	Full deduction up to contribution limit
	If you're covered by a workplace retirement plan: Between $99,000 and $118,999 If your spouse is covered: Between $186,000 and $195,999	Partial deduction
	If you're covered by a workplace retirement plan: $119,000 or more If your spouse is covered: $196,000 or more	No deduction
Single or head of household	$62,000 or less	Full deduction up to contribution limit
	More than $62,000 but less than $72,000	Partial deduction
	$72,000 or more	No deduction
Married filing separately	If you or your spouse is covered by a workplace retirement plan: Less than $10,000	Partial deduction
Married filing separately	If you or your spouse is covered: $10,000 or more	No deduction

2. Boost your savings

The tax savings is a nice immediate perk, but the main benefit of an IRA is the way it helps you save for your future.

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By opening an IRA, you’re taking a big step toward retirement security. Here’s how it works: Once you open your IRA, you’ll pick some investments for your $5,500 (it’s OK to contribute less — the main thing is getting started on the road to saving). Then you’ll sit back and let your money grow.

Provided you meet eligibility requirements, you don’t pay taxes on your contributions or your investment earnings until you withdraw your money in retirement. And every year until then, you can add another $5,500 ($6,500 if you’re 50 or older) — without paying taxes until you retire or otherwise withdraw the money.

Ready to get started? You can browse providers below to find the right place to open your IRA.

Standout IRA providers for DIY investors

With low costs and advanced research tools, these brokers are perfect for those who want to manage their own portfolios.

Broker	Highlights	Commissions	Account Minimum	Current Offers	Start Investing
Merrill Edge Show Details	Breadth of research from other providers and own offering	Commissions $6.95 per trade	Account Minimum $0	Current Offers $100-$600 in cash bonus with a qualifying deposit	Open account on Merrill Edge's secure website

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TD Ameritrade Show Details	Top research; two powerful trade platforms; educational content	Commissions $6.95 per trade	Account Minimum $0	Current Offers 60 days of commission-free trades with qualifying deposit	Open account on TD Ameritrade's secure website

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Etrade Show Details	Large selection; reasonable commissions and fees	Commissions $6.95 per trade	Account Minimum $500	Current Offers Up to 500 commission-free trades with a qualifying deposit	Open account on Etrade's secure website

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Standout IRA providers for hands-off investors

Put your investments on autopilot. These robo-advisors offer portfolio management — informed by computer algorithms and your personal investing preferences — at an affordable rate.

Broker	Highlights	Commissions	Account Minimum	Current Offers	Start Investing
Betterment Show Details	Offers access to human advisors for additional fee.	Commissions 0.25% management fee	Account Minimum $0	Current Offers Up to 1 year of free management with a qualifying deposit	Open account on Betterment's secure website

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Wealthfront Show Details	Free management of first $5,000 (for NerdWallet readers); advanced tax optimization strategies.	Commissions 0.25% management fee	Account Minimum $500	Current Offers $5,000 amount of assets managed for free	Open account on Wealthfront's secure website

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Wealthsimple Show Details	Socially responsible investments; free tax-loss harvesting	Commissions 0.40%-0.50% management fee	Account Minimum $0	Current Offers $10,000 amount of assets managed for free for one year	Open account on Wealthsimple's secure website

Show Details

Want to see more providers?

Review our rankings of the top IRA brokerages of 2018.

See the rankings

Need more resources?

See our library of IRA FAQs to find answers to your questions.

How much can I contribute to an IRA?

How is an IRA different from my 401(k)?

Should I consider a Roth IRA instead of a traditional IRA?

What do I need to open an IRA?

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