Individual Retirement Accounts (IRAs) 

Overview

It’s never too early to begin saving for the future

Start preparing for the best and brightest years ahead of you.

A comfortable retirement is everyone’s dream. The earlier you start contributing to a retirement plan, the more you’ll save for your golden years. With an Individual Retirement Account (IRA), you can start saving for your future today.

If you’re also looking to save for a child’s education, we offer Coverdell Education Savings Accounts (CESAs). Learn more about all available accounts below.

SOLUTIONS

Retirement and education savings accounts

Is a Roth, Rollover, or Traditional IRA right for you? With all the options available, it’s sometimes hard to know the difference. We’re here to help you understand the nuances and find the right account for your retirement or education savings.

Account Type Traditional IRA Roth IRA Rollover IRA Coverdell Education Savings Accounts (CESAs)

Description

A retirement savings account that allows you to invest pre-tax income

A retirement savings account that allows you to invest after-tax income

A retirement savings account that’s intended for people who have changed jobs or retired and need to “roll” their 401(k) into a Traditional or Roth IRA

A savings account that’s intended to pay the qualified education expenses of a designated beneficiary, who must be younger than age 18 or a special needs beneficiary

Eligibility

Must be younger than 70½ years old to open

Eligibility is determined by the IRS and based on your modified adjusted gross income (AGI)

No age limits on eligibility 

Depends on the IRA account you choose (See information on Traditional and Roth IRAs)

To be eligible, your modified gross adjusted income for the year must be less than $110,000 for an individual ($220,000 for joint returns)

Taxes

Contributions grow on a tax-deferred basis, meaning you will not pay taxes on your earnings until you withdraw your funds. Contributions may be tax-deductible.

Contributions are taxed prior to investment and will grow on a tax-free basis. You will pay no taxes upon withdrawal.

See information on Traditional and Roth IRAs

Earnings accumulate on a tax-free basis. Contributions are not tax-deductible.

Contributions

Ability to contribute up to age 70½

How much you can contribute is determined by IRS guidelines and is based on your age. To learn more, visit IRS.gov.

Ability to contribute past age 70½

How much you can contribute is determined by IRS guidelines. The amount you can contribute may be determined by your age, filing status, and modified adjusted gross income (AGI). To learn more, visit IRS.gov.

See information on Traditional and Roth IRAs

Contributions must be in cash and may total $2,000 per year for each child.

If the child has more than one CESA, contributions across all accounts must not exceed $2,000.

Withdrawals

Allows you to withdraw money from your account at age 59½. If you withdraw funds before this time, you will be subject to a distribution penalty.

Allows you to withdraw principal from your account at any time without penalty if your account has been open at least five years and you’re 59½ or older.

See information on Traditional and Roth IRAs

Withdrawals are penalty-free if used for qualified higher education expenses.

Required Minimum Distribution

Must withdraw an IRS-determined minimum from your account after you reach age 70½. 

There is no required minimum distribution (RMD) for Roth IRAs during the life of the original owner. Your beneficiaries, however, will be subject to the RMD of a Traditional IRA.

See information on Traditional and Roth IRAs

Must withdraw all account funds by the time the child reaches age 30, unless he or she is a special needs beneficiary. 

Want to convert your Traditional IRA to a Roth IRA?

Converting a Traditional IRA to a Roth IRA may have beneficial tax implications for you. Before you make the switch, you should consult your tax advisor. To learn more, please visit a BBVA branch near you.

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Example

Why invest in an IRA now?

It’s simple. The sooner you begin contributing to an IRA, the more money you’ll have for retirement. The longer you wait, the less you may have. Here’s a startling (and real) example:

How much you put in vs. total account worth

This chart shows the total account worth of your IRA if you start saving at 21.

IRA Chart

Now, see what happens if you wait until age 35 to start.

IRA Chart

These charts assume annual contributions and a 3% rate of return compounded monthly. Your own plan may earn more or less than this example and income taxes would be due when you withdraw from your plan.

FAQs

Frequently asked questions

How do I open an IRA?

Opening a Traditional, Roth, Rollover, or Coverdell Education IRA is easy with BBVA. We offer two different ways to get started:

How much does an IRA cost?

It’s completely free to open an IRA account with BBVA. You will, however, need to fund your account.

By law, there’s no minimum amount required to open an IRA. However, with both Traditional and Roth IRAs, individuals under the age of 50 can only deposit $5,500 into the account each tax year, while those over 50 can deposit $6,500

What do I need to open an IRA?

To open an IRA, you will need the following information and documentation:

  • Name and date of birth
  • Primary address, phone number, and email address
  • A valid I.D. (driver’s license, passport, or state-issued I.D.)
  • Social Security card or number
  • Your checking account and routing number
  • Your employer’s name, address, and contact information

If you are moving pre-tax money from your previous employer’s 401(k) plan to an IRA, also known as a ‘rollover,’ you need to contact your previous plan’s administrator and request a check or wire transfer to your new account. 

How many IRAs can I have?

There is no limit to the number of IRA accounts you can have. However, the Internal Revenue Service (IRS) imposes limits on how much you can contribute to any or all of your IRAs each tax year. Currently, individuals under the age of 50 can only deposit $5,500 into the account each tax year, while those over 50 can deposit $6,500.

Find current contribution limits at IRS.gov

Details you need to make a smart decision

This content is for general information and educational purposes only and should not be considered tax, legal or financial advice. Please consult your tax, legal or financial professional for advice regarding your personal circumstances.