IRA Basics

What is an IRA?

An Individual Retirement Account (IRA) is a tax-advantaged account designed to help you save for retirement. There are two main types, Roth and Traditional, each with different advantages.
  • With a Roth IRA, you make contributions with money you've already paid taxes on (after-tax) and your money may grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met.
  • In a Traditional IRA, you make contributions with money you may be able to deduct on your tax return and any earnings potentially grow tax-deferred until you withdraw them in retirement1.
In either case, the tax benefits allow your savings to grow, or compound, more quickly than in a taxable brokerage account.

Why invest in an IRA?

Financial experts estimate that you may need up to 85% of your pre-retirement income in retirement. An employer-sponsored plan might not be enough to accumulate the savings you need. Fortunately, you can contribute to both a 401(k) and an IRA. A Fidelity No-Fee2 IRA can help you:
  • Supplement your current savings in your employer-sponsored retirement plan.
  • Take advantage of the power of compounding.

How to get started

 
Traditional and Roth IRAs are both long-term savings vehicles with similar structures. Here are the basics:
 

Open and fund Complete an application and make an initial investment (as little as $200 per month with SimpleStartSM).
Choose Investments Put your savings to work by investing in stocks, bonds, CDs, as well as any of over 4,600 Fidelity and non-Fidelity funds.
Contribute Yearly Contribute the maximum whenever you can.
Monitor Performance Keep an eye on your savings and make adjustments as needed, especially as retirement nears and your goals change.

What do I need to open one?

All it takes is an easy application. And with SimpleStartSM and automatic monthly contributions, you can begin saving for as little as $200 a month3.
IRA Limits and Deadlines.


  1. For a Traditional IRA, full deductibility of a contribution for 2008 is available to active participants whose 2008 Modified Adjusted Gross Income (MAGI) is $85,000 or less (joint) and $53,000 or less (single); partial deductibility for MAGI up to $105,000 (joint) and $63,000 (single). For contributions in tax year 2009, the full deductibility MAGI limits are raised to $89,000 or less (joint) and raised to $55,000 or less (single); partial deductibility for MAGI up to $109,000 (joint) and $65,000 (single). In addition, full deductibility of a contribution is available for working or nonworking spouses who are not covered by an employer-sponsored plan whose MAGI is less than $159,000 for 2008 and $166,000 for 2009; partial deductibility for MAGI up to $169,000 for 2008 and $176,000 for 2009.
  2. There is no IRA brokerage fee on Fidelity's Traditional, Roth, SEP, and Rollover IRAs. Fund expenses and brokerage commissions still apply. Depending on your situation, low-balance fees, short-term trading fees, and account closing fees may apply.
  3. $2500 minimum investment limit waived if you enroll in automatic contributions. The minimum automatic contribution is $200 per month (or $600 per quarter). Non-Fidelity Funds and certain Fidelity Funds not eligible.
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