How much does it cost to open an IRA?

The cost of opening an IRA depends on the provider. Some banks and brokerages will do it for free, while others charge a relatively small fee. Check with your provider to make sure there aren't excessive maintenance fees for handling your investments.

How much should a beginner invest in an IRA?

A beginning investor should put as much money as possible into retirement. A good rule of thumb is to save at least 15% of your annual income.

What are the different types of IRAs?

There are four major types of IRAs: a traditional IRA, a Roth IRA, a simplified employment pension IRA (SEP-IRA), and a SIMPLE IRA.

What is the minimum to open an IRA?

The IRS does not require a minimum IRA investment, but some brokerages have a minimum investment.

Where is the best place to open an IRA?

It depends on the investor. Many people will be perfectly comfortable using a robo-advisor and online service; others may prefer a brick-and-mortar bank. Some popular IRA providers include Vanguard, Fidelity, Charles Schwab (NYSE:SCHW), Wealthfront, and Robinhood (NASDAQ:HOOD). Either way, the best place to open an IRA is wherever you feel most comfortable.

How to Open an IRA in 2026 | The Motley Fool

How to Open an IRA

By Robin Hartill, CFP – Updated Feb 19, 2026 at 6:57 PM EST | Fact-checked by Parker Hicks

Key Points

Open an IRA as additional retirement security; choice of traditional, Roth, or others based on needs.
Invest maximum allowable amounts early in the year; if not possible, set up regular contributions.
Understand IRA pros like tax benefits and cons like withdrawal penalties and contribution limits.

More than one-third of Americans have an individual retirement account (IRA). In case you're not among them, we'll discuss how to open an IRA, the different types of IRAs, and whether an IRA is right for you.

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Jar of money labeled IRA sitting next to a calculator and atop various denominations of U.S. currency. — Image source: Getty Images.

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Tax Deduction

A tax deduction occurs when a certain expense can be used to reduce the amount of your income subject to income taxes.

A Roth IRA can also be problematic when it comes to state income taxes, which must be paid in the year that the contributions were earned. This can be particularly annoying when relocating from a state with a high tax rate to one with a lower state income tax rate.

SIMPLE IRA

The Savings Incentive Match Plan for Employees Individual Retirement Account (SIMPLE IRA) was designed as an IRA for small businesses and self-employed workers. Similar to more well-known plans, such as a 401(k), the SIMPLE IRA offers employers with fewer than 100 workers a simpler administrative route to helping their workers save for retirement.

The SIMPLE IRA's biggest selling points are its tax advantages and simple administration. Employees aren't required to make contributions if one is offered, and workers can make direct rollovers from an IRA, 401(k), or similar plan. If the business grows to include more than 100 employees, it can continue offering a SIMPLE IRA for two years.

Contribution limits are also greater than those for standard traditional or Roth IRAs. Workers younger than 50 can contribute as much as $16,500 (2025) or $17,000 (2026). However, in some circumstances, like if the business employs 25 or fewer people, higher limits of $17,600 (2025) and $18,100 (2026) apply.

Employees 50 to 59 or older than 64 can add catch-up contributions of $3,500 (2025) or $4,000 (2026). Workers between the ages of 60 and 63 can make $5,250 in catch-up contributions in both 2025 and 2026.

For self-employed workers, the SIMPLE IRA offers much less red tape and hassle while keeping the tax advantages of an IRA -- with higher contribution limits than traditional or Roth IRAs, to boot.

Not all small businesses are likely to love SIMPLE IRAs, though. The employer can either match employee contributions up to 3% or contribute a flat 2% compensation for workers who make more than $5,000.

SEP-IRA

A Simplified Employee Pension (SEP) IRA has a few key wrinkles that make it different from other retirement accounts. It's created by an employer that benefits from tax breaks by making employee contributions.

One of the biggest advantages involves annual contribution limits. Employers can contribute as much as 25% of a worker's salary, or $70,000 in 2025 and $72,000 in 2026.

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Roth IRA Rollovers

If you need to roll over your Roth IRA, here's how to do it right.

Do Roth IRAs Have RMDs?

There are usually no required minimum distributions on Roth IRAs -- with some exceptions.

Can You Borrow From IRAs?

Get answers to your IRA borrowing questions and learn how to maximize your financial options if you need to borrow.

SEP IRA Rules for 2026

Planning your retirement? Here are the simplified employee pension (SEP) IRA rules you should take into account.

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FAQ about how to open an IRA

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About the Author

Robin Hartill, CFP, is a contributing writer at The Motley Fool. Robin’s work has also been published by Yahoo Finance, USA Today, and Penny Hoarder. She is a graduate of the University of Florida.

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The Motley Fool has a disclosure policy.

Pros and cons of different IRAs

Let's break down the advantages and disadvantages of the four major types of IRAs.

Traditional IRA

The biggest benefit of a traditional IRA is that if you qualify to deduct your contributions, taxes are applied only when you make withdrawals. And since taxes aren't being applied (yet), your money has more opportunity to grow via the miracle of compound earnings. It's worth noting that many people retire in a lower tax bracket than when they were working, resulting in a minimal tax bill during retirement.

If you're younger than 50, you can contribute $7,000 annually in 2025 and $7,500 in 2026. If you're older, the contribution limit jumps to $8,000 in 2025 and $8,600 in 2026. You can also convert your traditional account to a Roth IRA, but you'll owe taxes on the converted amount. (You can't, however, convert a Roth IRA to a traditional IRA.)

If you're an active participant in a workplace retirement plan, your income must fall below a certain amount to deduct your contributions. Because you'll owe taxes and potential penalties (if you're younger than 59 1/2) on withdrawals, it's difficult to use a traditional IRA for emergencies.

Finally, required minimum distributions (RMDs) must begin by age 73, or you'll be penalized. Under the Secure Act 2.0 rules, the RMD age will increase to 75 in 2033.

Roth IRA

One of the biggest advantages of a Roth IRA is its tax structure. Since you're funding it with income that's already been taxed, withdrawals -- and any growth in the account -- are tax-free. And since you've already paid taxes, distributions from a Roth IRA won't affect your adjusted gross income. You can also contribute to a Roth IRA even if you're participating in a qualified retirement plan.

You can withdraw Roth IRA contributions at any time without owing taxes or a penalty. But you'll owe taxes and penalties if you eat into the account's earnings before age 59 1/2 or when the account isn't at least five years old.

The most obvious disadvantage of a Roth IRA is that your contributions aren't tax-deductible. Your ability to contribute to a Roth IRA also depends on certain income limits.

How to Open an IRA

Key Points