IRAs: Individual Retirement Accounts
Open an Individual Retirement Account (IRA) and start planning your retirement today.
INDIVIDUAL RETIREMENT ACCOUNT (IRA) TYPES
Individual Retirement Accounts (IRA) are personal, tax-advantaged accounts that allow individuals to save and invest for retirement. IRAs can be opened through financial institutions - such as banks, brokerage companies, insurance firms, or investment companies.
Within the IRA universe, there are several different types of accounts that individuals can choose from: traditional IRAs, Roth IRAs, and Simplified Employee Pension (SEP), and beneficiary IRAs. There are also subsets of those account types, including beneficiary traditional IRAs and beneficiary Roth IRAs. The details of each are outlined below. You can also rollover an IRA based on the specs of your employer-sponsored plan (e.g. 401(k) and 403(b)).
The range of different IRAs is designed to fit different needs and goals of an investor. For example, some investors may want flexibility in how they manage their own IRA funds. Learn about each type of IRA with different rules regarding eligibility, taxation and withdrawals. The information below provides an overview of each IRA and some of the associated benefits and rules.
TRADITIONAL IRA
A traditional IRA is an account that’s eligible for persons with earned income, or who file a joint return with a spouse who earns an income. For 2024, tax-deferred contributions of up to $7,000 per year are allowed.
Opportunity exists to grow your earnings tax-deferred as investors are taxed when they take distributions (or withdraw) from the account.
External retirement accounts like a 401k can be moved to a tastytrade IRA as well. This way, you can decide how to invest your retirement funds. You can roll over your employer-based retirement account to a Traditional or Roth IRA based on your plan’s specifications.
ROTH IRA
A Roth IRA is an individual retirement account eligible for persons with earned income, and contributions may be limited based on your Modified Adjusted Gross Income (MAGI).
Roth IRAs allow deposits from after-tax contributions. When you’re ready to make a withdrawal, it will be tax-free and penalty-free at any time for qualified distributions.
External retirement accounts like a 401k can be moved to a tastytrade IRA as well. This way, you can decide how to invest your retirement funds. You can roll over your employer-based retirement account to a Traditional or Roth IRA based on your plan’s specifications.
SIMPLIFIED EMPLOYEE PENSION (SEP) IRA
The simplified employee pension (SEP) is an individual retirement account eligible for self-employed individuals and small business owners or employees. Earnings grow tax-deferred and are taxed upon withdrawal.
BENEFICIARY TRADITIONAL IRA
The beneficiary traditional IRA is a retirement account that’s opened when a designated beneficiary inherits an IRA after the original owner is deceased.
Qualifying contributions are generally made with pre-tax funds, profits grow tax-deferred, and qualifying withdrawals are taxed at the ordinary income rate.
BENEFICIARY ROTH IRA
The beneficiary Roth IRA is opened when a designated beneficiary inherits a Roth IRA after the original owner is deceased. The required minimum distributions with this account are generally tax-free.
WHY OPEN AN IRA WITH US?
ENJOY TAX BENEFITS
Harness potential IRA tax benefits.1 Contribute up to the yearly limit until the tax filing deadline with a traditional or Roth IRA
MANAGE YOUR OWN FUNDS
Get increased flexibility in how you handle your funds to align with your retirement goals
EXPLORE DIFFERENT STRATEGIES
Take advantage of options strategies like defined-risk spreads and uncovered calls2 with The Works trading level
WIDE RANGE OF TRADABLE PRODUCTS
Delve into a variety of investment products – pick from stocks, ETFs, options, futures, future options, and micro futures
TRADE ON AN INNOVATIVE PLATFORM
Experience trading on a platform built for traders by traders
SIMPLE ACCOUNT MANAGEMENT
Log in with a single username to trade and manage all your IRA, cash and margin accounts at once.
WHY TRADE IN AN IRA?
Due to their tax advantages, IRAs represent a compelling choice for long-term savings and investment. IRAs can also be paired with 401(k) plans and other employee sponsored retirement plans.
For example, contributions made to any one of these following retirement accounts: traditional IRAs, 401(k) accounts, SIMPLE (Savings Incentive Match Plan for Employees) IRAs3, and SEP IRAs, are made on a pre-tax basis. This allows your account to grow on a tax-deferred basis. You may be able to claim tax deductions for your contributions during the years in which you make contributions. However, you’ll be taxed at your ordinary income tax rate at the time that you begin making withdrawals.
Roth IRAs, on the other hand, are funded using after-tax dollars, which means that withdrawals made during retirement are tax-free, provided that certain conditions are met. Depending on one’s unique situation, one type of IRA may be preferred over another.
IRA POTENTIAL TAX ADVANTAGES
There are several potential tax advantages with an IRA, some of them are:
- Tax-deferred growth for traditional, SEP, SIMPLE, and 401 (k) accounts
- Contributions to traditional IRAs may be deductible on your income tax
- Contributions and profits may be withdrawn tax-free and penalty-free for qualified distributions in a Roth IRA
- No required minimum distribution (RMDs) for Roth IRAs
Please speak to an accountant or tax advisor regarding potential tax advantages and disadvantages for your IRA.
WHAT CAN YOU TRADE IN AN IRA?
The table below lays out the asset classes and options trading strategies you can trade based on your account type and trading level.
| IRA The Works (limited margin) | Basic IRA (limited margin) | Limited / Cash* | |
|---|---|---|---|
Buy stock |  | | |
Short sell stock | - | - | - |
Buy options | | | |
Sell covered calls | | | |
Sell cash-secured puts | | | |
Defined-risk options spreads | | | - |
Sell naked puts | - | - | - |
Sell naked calls** | | - | - |
Futures^ | | - | - |
Cryptocurrencies | - | - | - |
Buy stock
Short sell stock
-
-
-
Buy options
Sell covered calls
Sell cash-secured puts
Defined-risk options spreads
-
Sell naked puts
-
-
-
Sell naked calls**
-
-
Futures^
-
-
Cryptocurrencies
-
-
-
* By default, IRAs are provisioned to have margin relief, which allows for defined-risk spread trading. However, if you wish to provision your IRA as a cash account instead, please write to accounts@tastytrade.com.
** To qualify for uncovered call writing in an IRA, you must meet the requirements for IRA The Works – our highest trading level.2
^ Your account must qualify for IRA The Works to apply for futures trading. Learn more about CME futures products.
NON-PERMISSIBLE TRADING ACTIVITIES IN AN IRA
The following trading strategies and position types aren’t allowed in IRAs:
- Overnight leverage and borrowing
- Short selling stock
- Cryptocurrency trading
HOW CAN I OPEN AN IRA?
You can apply to open your IRA in minutes with tastytrade by following these simple steps:
1. CHOOSE AN IRA TYPE
Consider the benefits along with your specific requirements and financial goals to find an IRA that’s suitable for your personal situation
2. FUND YOUR ACCOUNT
Deposit funds by rolling an employer plan into the account, transferring an existing IRA to tastytrade, or making a direct contribution
3. TAKE YOUR FIRST POSITION
Trade or invest by choosing from a wide range of markets and products such as stocks, ETFs, options, and futures
FAQs
Yes, tastytrade offers the following types of IRAs:
- Traditional IRA
- Beneficiary traditional IRA
- Roth IRA
- Beneficiary ROTH IRA
- SEP IRA
You can also roll over an IRA to a Traditional or Roth based on your employer-sponsored plan. Find out more about different IRA types
Yes, you can open a Roth IRA with tastytrade if you receive an earned income (i.e. wages, bonuses or commissions).
Yes, you can determine your beneficiaries and percentage weights for your IRA.
Yes, it is. Apply for options trading in an IRA with tastytrade.
To transfer your IRA to tastytrade, you’ll complete the IRA deposit slip. Check to make sure the transferring IRA is the same IRA type as the one at tastytrade, and select Transfer from Identical IRA within the Contribution Information section.
The next step is to send the completed IRA deposit slips to banking@tastytrade.com. Some firms may require a letter of authorization, LOA, from tastytrade before they send the wire.
You can move your retirement account from an existing IRA, including an employer-based retirement account, to a tastytrade IRA with the steps below:
- Open a tastytrade IRA
- Contact the institution that holds the account to initiate the rollover
- The institution needs to make a check payable to Apex Clearing Corporation FBO
- Mail the check to: tastytrade, 1300 W. Fulton Market Suite 600, Chicago, IL 60607
All investments involve risk of loss. Please carefully consider the risks associated with your investments and if such trading is suitable for you before deciding to trade certain products or strategies. You are solely responsible for making your investment and trading decisions and for evaluating the risks associated with your investments.