IRA
Unlike a 401(k), nobody has to offer you an IRA — you open one yourself, at almost any brokerage, and it works whether or not your employer gives you a retirement plan at all.
What Is It
An IRA (Individual Retirement Account) is a tax-advantaged retirement account you open on your own, independent of any employer. There are several types — Traditional and Roth are the two most common, each taxed differently — but all IRAs share the same core purpose: a place to invest for retirement outside a workplace plan, or in addition to one.
Why It Matters
You can contribute to an IRA even if you already have a 401(k) through work, making it a genuine second bucket for retirement savings, not a replacement for one. For 2026, the contribution limit is $7,500 across all your IRAs combined ($8,600 if you’re 50 or older) — that’s a shared limit whether you split contributions between a Traditional and a Roth IRA or put it all in one.
Quick Example
You max out your 401(k) at work and still have money left to save. Opening an IRA lets you put an additional $7,500 to work for retirement in 2026, on top of whatever your 401(k) already holds — a second tax-advantaged account, not a competing one.
Try splitting your own $7,500 between the two below — the combined total never moves, only where it lands.
Not sure how to split it? The Roth vs. Traditional Calculator can help you decide.
Try It Yourself
See how contributing to both a workplace plan and an IRA compounds together over your full timeline.
↗ retiresmart.borrowingbetter.com 🔥RetireSmart — Retirement Calculator
Model your IRA contributions alongside any workplace plan to see your full retirement picture.