How to Open an IRA in Four Easy Steps
What is an Individual Retirement Account (IRA)?
An IRA is a tax-advantaged investment account designed for individuals to prepare for retirement; however, the specific tax advantages of IRAs vary between account types. Contributions to some IRA types are made with pre-tax dollars, and taxes are deferred until funds are withdrawn from the account in retirement. Other types of IRAs allow you to make deposits using funds that have already been taxed, in some circumstances withdrawals at retirement may be tax-free.
Four Steps to Opening an IRA
Opening an IRA account is easy. Read our guide below to find out how:
- Choose the retirement account type
- Fill out an application
- Fund your account
- Start investing and trading
1. Choose the Retirement Account Type
tastytrade provides a range of IRA types that cater to different needs, each with their own set of requirements and advantages. The type of IRA you choose should align with your financial needs and anticipated requirements at retirement. These are the IRA types that tastytrade offers:
- Traditional IRA
- Roth IRA
- Simplified Employee Pension (SEP) IRA
- Beneficiary traditional IRA
- Beneficiary Roth IRA
2. Fill out the Application
tastytrade makes it easy to open an IRA. While completing our account application, you'll start with creating a login using your email and a unique password. The account application will ask for some personal information, including your name and address. You’ll also answer a few additional questions, including information about your income, personal assets, investment experience, and financial objectives.
3. Fund Your Account
Once your account is approved, you can begin the funding process. tastytrade provides several methods for you to fund your account. A common funding method is by ACAT—transferring an existing IRA that you hold with a different brokerage. You can choose to roll over a past employer-sponsored plan, such as a 401(k) or 403(b), into your new IRA. This can be an excellent way to continue growing your retirement savings in a tax-advantaged way. Alternatively, you can also choose to fund your account via ACH or wire if you have not hit your contribution limit for the year. Learn more about funding methods.
4. Start Investing and Trading
Once your account is funded, you can begin investing and trading. tastytrade allows you to trade stocks, bonds, exchange-traded funds (ETFs), options, and even futures in an IRA, although you must first apply and receive approval for an elevated trading level. Certain activities are not allowed in a tastytrade IRA, including borrowing, short-selling stock, and trading cryptocurrencies.
| 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 | - | - | - |
| IRA The Works (limited margin) | |
|---|---|
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 | - |
| Basic IRA (limited margin) | |
|---|---|
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 | - |
| 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 | - |
* 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 trade an uncovered call in an IRA, The Works trading level is required. Additionally, the IRA must have a start of the day net liquidation value of $25,000, and the higher margin requirement is held when compared to a non-retirement account with the Works. Please see here for more detail.
^ Your account must qualify for IRA The Works to apply for futures trading. Learn more about CME futures products.
With that said, it’s also important to know your risk tolerance so you can develop a strategy that works for you. Some of the factors you may want to consider when measuring your own tolerance are your age, financial goals, trading knowledge, and your current financial situation. At the end of the day, it's important to develop a plan that suits your needs, continuing to educate yourself, and adjust the plan as needed.
FAQs
IRAs are free to open at tastytrade, and there is no account minimum to open.
There are a few basic requirements to open an IRA. You must have earned income or other qualifying compensation for the tax year. You must reside in the United States and have a social security number or qualifying visa. If those requirements are met, you’ll likely be eligible to open an IRA.
As long as you provide the required documentation and your application is approved, you can start investing in your IRA in a matter of days.
IRAs do not earn interest on idle cash, but you can invest in stocks, bonds, ETFs, and other instruments.
tastytrade doesn’t charge maintenance or inactivity fees for IRAs, but trading incurs commissions and fees.
The annual contribution limit for an IRA for 2025 is $7,000. If you’re 50 years or older, however, you can play a bit of catch-up and contribute an additional $1,000, making it $8,000 for the year. The government sets these limits each year, and sometimes they change, so it's always a good idea to keep an eye on any updates.
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.