You can open a traditional IRA at a bank, brokerage, or credit union in under an hour

A traditional IRA is a retirement savings account where you contribute money that may be tax-deductible in the year you contribute it, and the money grows tax-free until you withdraw it in retirement. To open one, you pick a financial institution, complete an account application, fund the account, and choose how to invest the money. The entire process takes 15 to 45 minutes online or in person.

You do not need to be employed, have a certain income level, or meet any other condition beyond being under age 73 and having earned income in the year you contribute. The main decision is where to open it — different institutions offer different investment options and fee structures — and how much to contribute in your first year.

Key Takeaways

  • You can open a traditional IRA at any bank, brokerage firm, or credit union that offers them, and you can move money between institutions later without penalty.
  • You will need your Social Security number, date of birth, address, and employment information to complete the application.
  • Contributions to a traditional IRA may reduce your taxable income in the year you make them, but the rules depend on whether you or your spouse have a workplace retirement plan.
  • You can contribute up to $7,000 per year (or $8,000 if you are age 50 or older), but you must have earned income equal to or greater than the amount you contribute.
  • After opening the account, you choose how the money is invested — in stocks, bonds, mutual funds, or other options the institution offers.

Where to open a traditional IRA

You can open a traditional IRA at any financial institution that offers them. The most common choices are online brokerages (Fidelity, Vanguard, Charles Schwab, E*TRADE), traditional banks (Chase, Bank of America, Wells Fargo), and credit unions. Each offers different investment options and fee structures.

Online brokerages typically offer the widest range of investments — individual stocks, bonds, mutual funds, exchange-traded funds (ETFs) — and charge low or no account fees. Banks usually offer IRAs invested in CDs, savings accounts, or mutual funds, and may charge annual maintenance fees. Credit unions often offer similar products to banks and may have lower fees for members.

You can open more than one IRA at different institutions, and you can move money between them later through a process called a rollover or transfer, which does not trigger taxes or penalties. This means you do not need to choose perfectly the first time.

What documents and information you will need

Have the following information ready when you apply:

  • Your Social Security number
  • Your date of birth
  • Your current address
  • Your employment status and employer name (if employed)
  • Your income for the year (or an estimate if you are still earning it)

You will also need to decide whether you want the account to be held in your name alone or as a joint account (if married). Most people open IRAs in their own name only. If you are married and want a joint account, some institutions offer this; others require separate accounts for each spouse.

You do not need to provide proof of income or employment — the institution will ask you to confirm it, and you are responsible for ensuring the information is accurate. The IRS may ask for documentation later if you claim a deduction.

The application process

Most institutions let you apply online, by phone, or in person. Online is fastest. You will fill out a form that asks for your personal information, employment details, and how you want the account structured. The form also asks whether you want the account to be a traditional IRA or a Roth IRA — choose traditional IRA.

You will then choose your investment option. If you do not know what to invest in, many institutions offer target-date funds, which automatically adjust from stocks to bonds as you approach retirement. You can also choose a money market fund or savings option while you decide. You can change your investments later at any time.

After you submit the application, the institution will confirm your account is open, usually within one business day. You will receive an account number and login credentials if you applied online. You can then fund the account.

How to fund your account

You can fund a traditional IRA by transferring money from a bank account, mailing a check, or (at some institutions) making an in-person deposit. Most people use a bank transfer, which takes one to three business days.

You can contribute any amount up to the annual limit. For 2024, the limit is $7,000 per year if you are under age 50, and $8,000 per year if you are age 50 or older. You must have earned income equal to or greater than the amount you contribute — if you earned $4,000 in 2024, you can contribute up to $4,000 to your IRA for that year, not the full $7,000.

You can contribute to a traditional IRA for a given tax year until the tax filing deadline for that year, which is usually April 15 of the following year. For example, you can contribute to your 2024 IRA until April 15, 2025.

Tax deduction rules for traditional IRA contributions

One of the main reasons people open traditional IRAs is that contributions may be tax-deductible — meaning you can subtract them from your income when you file your taxes, which lowers the income tax you owe that year. However, the rules depend on whether you or your spouse have a workplace retirement plan like a 401(k) or 403(b).

If you do not have a workplace retirement plan and your spouse does not either, you can deduct the full amount you contribute. If you have a workplace retirement plan, your ability to deduct a traditional IRA contribution phases out based on your income. The income limits change each year. For 2024, if you are single and have a workplace plan, the deduction begins to phase out at $77,000 of income and is completely gone at $87,000. If you are married filing jointly and your spouse has a workplace plan, the phase-out range is $123,000 to $143,000.

If you are married, your spouse has a workplace plan, but you do not, you can deduct contributions up to $230,000 of household income (for 2024). Above that, the deduction phases out.

You do not have to deduct your contribution — you can choose to contribute after-tax money instead. This is called a non-deductible contribution. You would do this if you have already maxed out a workplace plan and want additional tax-deferred savings, or if your income is above the deduction limit. Keep records of non-deductible contributions, because you will owe taxes on the earnings when you withdraw the money.

Choosing your investments

After your account is open and funded, you choose how the money is invested. If you did not choose during the application process, you can do this in your account dashboard or by calling the institution.

Common investment options are target-date funds (which automatically shift from stocks to bonds as you approach a target retirement year), index funds (which track a broad market index like the S&P 500), individual stocks and bonds, and money market funds. If you are unsure, a target-date fund matching your expected retirement year is a straightforward choice that requires no ongoing decisions.

You can change your investments at any time without penalty or tax consequence. Many people start with one simple option and adjust later as they learn more about their preferences.

Frequently Asked Questions

Can I open a traditional IRA if I am self-employed?

Yes. You need earned income, which includes self-employment income. You can open a traditional IRA and contribute up to $7,000 (or $8,000 if age 50 or older) as long as your self-employment income is at least that amount. You may also be able to open a SEP IRA or Solo 401(k), which allow larger contributions for self-employed people.

What happens if I contribute more than the annual limit?

If you contribute more than the limit, the excess is subject to a 6% penalty tax each year it remains in the account. You can withdraw the excess and any earnings on it before your tax filing deadline to avoid the penalty, or you can report it on your tax return and pay the penalty. It is best to avoid over-contributing by checking the current year's limit before you fund the account.

Can I open a traditional IRA if I already have a Roth IRA?

Yes. You can have both a traditional IRA and a Roth IRA at the same time. However, your total contributions to all IRAs combined cannot exceed the annual limit. If you contribute $4,000 to a Roth IRA, you can contribute only $3,000 to a traditional IRA that year (assuming the limit is $7,000).

Do I have to invest the money right away, or can I leave it in cash?

You can leave the money in a cash or money market option while you decide how to invest it. There is no requirement to invest in stocks or other securities. However, money in a cash account typically earns very little interest, so most people move it to an investment option within a few weeks or months.

Can I withdraw money from my traditional IRA before retirement?

You can withdraw money, but you will owe income tax on the withdrawal and a 10% penalty if you are under age 59½, with some exceptions (such as for a first-time home purchase, disability, or medical expenses). It is designed as a long-term retirement account, so early withdrawals are discouraged.