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Did you know contributing to an IRA may save you money on your 2017 taxes?

Save money on your taxes with an IRA.

Owe money on your 2017 taxes? Contributing to an IRA (Individual Retirement Account) may help lower your bill. How? Simply put, the amount you put towards your IRA may be deducted from your gross income (if you meet eligibility requirements, of course). Possibly saving you money by lowering your taxable income. The best news of all? It’s not too late to open yours!

Standout IRA providers for do-it-yourself investors

Manage your own portfolio. These IRA providers offer amazing benefits like superior customer service, low account minimums and competitive commission rates.

Broker

Highlights

Commissions

Account Minimum

Current Offers

Start Investing

NerdWallet rating

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Breadth of research; low commissions; customer service

Commissions

$6.95

per trade

Current Offers

$100-$600

in cash bonus with a qualifying deposit

on Merrill Edge's secure website

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NerdWallet rating

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Low commissions; No IRA annual fee; no account minimum

Commissions

$4.95

per trade

Current Offers

Up to $3,500

in cash bonus with a qualifying deposit

on Ally Invest's secure website

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NerdWallet rating

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Large number of no-trading-fee mutual funds; extensive research

Commissions

$6.95

per trade

Current Offers

Up to $600

in cash bonus with a qualifying deposit

on Etrade's secure website

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NerdWallet rating

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No account minimum; free research and education; retirement planning tools

Commissions

$6.95

per trade

Current Offers

$100-$600

in cash bonus with a qualifying deposit

on TD Ameritrade's secure website

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Standout robo-advisors for do-it-for-me investors

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

Broker

Highlights

Commissions

Account Minimum

Current Offers

Start Investing

NerdWallet rating

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Free management on small balances; hands-off approach for IRA investors.

Commissions

0.25%

management fee

Current Offers

$5,000

amount of assets managed for free

on Wealthfront's secure website

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NerdWallet rating

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Low-cost ETFs; automatic rebalancing; extensive advice

Commissions

0.25%

management fee

Current Offers

Up to 1 year

of free management with a qualifying deposit

on Betterment's secure website

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NerdWallet rating

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Socially responsible investments; free tax-loss harvesting

Commissions

0.40%-0.50%

management fee

Current Offers

$10,000

amount of assets managed for free for one year

on Wealthsimple's secure website

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Find the right IRA

Ready to get started? Check out these next-level providers that offer something for every investor.

Frequently asked questions

Contrary to what many believe, an IRA is not an investment itself: It’s an investment account you set up at a brokerage firm or other financial institution. Individuals add money to the account over time and use it to to purchase investments (such as individual stocks, mutual funds and bonds) that are held in the account. Eventually the money in that account can be withdrawn to provide income in retirement. The main perk of a traditional IRA is that contributions are tax-deductible up to IRS limits, which means contributing to an IRA can reduce your annual tax bill.

It’s a simple process: You can open an IRA online, at any broker or robo-advisor (though we’re partial to the ones above, for the reasons we outlined). It takes about 15 minutes and you’ll need to provide some personal information, including your name, birthday, mailing address and Social Security number. Here’s our guide to opening an IRA, which also includes information about how to fund and invest the account.

You can contribute up to $5,500 to an IRA each year, or $6,500 if you’re 50 or older. That’s a combined limit shared by the two types of IRA — you can have both a Roth and a traditional IRA, but you can’t contribute more than the maximum between the two. The limit doesn’t include amounts rolled over, such as from a 401(k).

Yes and no. Roth IRAs have income limits for eligibility; if you earn too much, your contribution limit is phased down or eliminated completely. (To see if you’re affected, use our Roth IRA calculator.) Traditional IRAs don’t have income limits, but if you’re also covered by a workplace retirement plan like a 401(k), the amount of your contribution that you can deduct may be phased down or eliminated. That means you can still make the maximum annual contribution, but a portion or all of it will be considered a nondeductible contribution. There’s no immediate tax benefit on nondeductible contributions, but you are still able to defer taxes on investment income until retirement. Read more about the traditional IRA deduction limits.

This is a retirement account, so the money is intended to stay put until age 59 ½ or later. That said, traditional IRA withdrawal rules are stricter than Roth IRA withdrawal rules: With a traditional IRA, you may be taxed and hit with a 10% early withdrawal penalty if you pull money out before age 59 ½. There are a few exceptions. With a Roth IRA, you can pull your contributions out at any time — remember, you’ve already paid taxes on them. You may be taxed or penalized on early distributions of investment earnings, however.

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At NerdWallet, we offer straightforward info and tools to help you make the best possible financial decisions. All for free. So how do we make money? In most cases, when someone applies or gets approved for a financial product we get paid. But that doesn’t sway our opinions or recommendations.