What’s an IRA and why have one?
An Individual Retirement Account
(IRA) is one of the best ways to save for retirement. Your IRA contributions can grow on either a federally tax-free or tax-deferred basis, which lets earnings in the account compound over time. Money in tax-smart accounts like IRAs and 401(k)s can compound faster than money in taxable accounts.
What’s the benefit of starting early?
When you start early, even small IRA contributions can have a big impact on your future due to the power of compounded growth. Money in your IRA is not taxed, which means your savings can grow much faster than in a taxable account. So by investing early in an IRA, you can earn more over time than you could in a regular savings account. While it’s never too late to start, the later it gets, the more you may have to put away to reach your goal.
If I have a 401(k), should I still open an IRA?
To save as much as possible for your retirement, it’s best to max out both your 401(k) and IRA. Can’t afford to fully fund both? Consider contributing to your 401(k) at least up to the amount your employer matches. Then contribute to either a Traditional IRA
, which typically offers more investment choices than a 401(k), or a Roth IRA
, which grows tax-free. For more information, read about how to maximize your retirement contributions
What are the 2008 and 2009 IRA contribution limits?
What are the fees and minimums for an IRA?
- Under age 50: $5,000
- 50 or older: $6,000
The minimum to open an IRA at Schwab is $1,000—or $0 if you set up an automatic monthly transfer of at least $100. And there are no account service fees or minimum balance fees.
What are my IRA investment choices?
You can select from a wide range of mutual funds, stocks, bonds, CDs, and more. Or, to choose the right investments for your IRA quickly and easily, consider Schwab Target Funds
—our already-diversified, all-in-one retirement solution.
What are retirement target date funds?
Retirement target date funds (or just target funds) are actively managed mutual funds that adjust over time as you approach retirement. They’re one of the easiest ways to invest your IRA. With smart and simple Schwab Target Funds, just pick the fund closest to your retirement date—whether 2010, 2020, 2030, or 2040—and let us take care of the rest. Your fund will automatically reduce risk as your retirement date nears. To invest in a Schwab Target Fund for your IRA, just choose the one closest to your retirement date on your IRA application.
Learn more about Target Funds
What do I need to complete my application online?
- Social Security number
- Driver’s license number
- Employer’s name and address (if applicable)
- Beneficiary’s Social Security number and contact information
- Statement from your bank or other financial institution if you’re transferring assets or cash to fund your new Schwab IRA online (recommended)
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.
Once your IRA application is submitted, funding must be completed and the application must be approved before any trading can begin.
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