Compare IRAs

American Century Investments® offers different IRA types designed to help investors like you save for a secure retirement. Find out the benefits of each and use our IRA calculators to decide which might be right for you.

  • IRA Benefits
  • Traditional vs. Roth IRAs

IRAs Can Help You Reach Your Retirement Goals

IRAs are a popular way to save for retirement in a tax-advantaged account—even if you already have a 401(k) or other workplace account. With two different choices—Roth or Traditional—IRAs provide you more investment options and opportunity to add to your savings for the future.

Each type of IRA offers advantages before and after you retire. These benefits are the same if you choose one of our Brokerage IRAs.

Traditional IRAs Offer Tax Benefits Now and Later

Traditional IRAs work well for some investors because the contributions are generally tax deductible. Here are some reasons why investing in a Traditional IRA may make sense.

Tax-Deductible Contributions

Tax-Deferred Earnings

Multiple Uses

Roth IRAs Offer Tax-Free Earnings and Flexibility

Roth IRA contributions are never tax deductible.1,2 But, there are other benefits, both before and after retirement, that may make this the right IRA for you.

Tax-Free Earnings

Multiple Uses

No Required Minimum Distributions

No Income Tax for Your Beneficiaries

Traditional vs. Roth: What's Different? What's the Same?

Traditional IRA

Income Requirements

You must have earned income to make contributions.

Contributions

Some or all contributions may be tax deductible. It depends on your modified adjusted gross income, tax filing status and if your spouse participated in a workplace plan.

Earnings

Income tax on earnings is deferred until you withdraw them.1

Additional Uses

"Special purpose" withdrawals allowed under specific conditions (examples: first home, higher education) are penalty free, but you may owe tax on earnings and deductible contributions.

Age Limits

At age 59½, you can make penalty-free withdrawals.

Distribution Requirements

You must take minimum distributions at a certain age4 annually to avoid a 50% penalty on the amount you were required to withdraw.

Roth IRA

INCOME REQUIREMENTS

You must have earned income below the annual limits. If your income is within the "phase-out" range, you may be able to make partial contributions.

CONTRIBUTIONS

Contributions are not tax deductible.

EARNINGS

Earnings are tax-free if the account is at least five years old and you are at least age 59½.

ADDITIONAL USES

"Special purpose" penalty-free withdrawals are allowed under specific conditions (examples: first home, higher education), but you may owe tax on earnings.

AGE LIMITS

At age 59½, you can make penalty-free withdrawals.

DISTRIBUTION REQUIREMENTS

You are not required to take money out at any age. Plus, you can contribute as long as you earn income.

Other Deductions Allowed



Deductible Traditional IRA Phaseouts (Does not apply to Roth IRA)

Covered by Employer Plan

When Filing Status is Single
  • 2020: $65,000-$75,000
  • 2021: $66,000-$76,000
When Filing Status is Married Filing Jointly
  • 2020: $104,000-$124,000
  • 2021: $105,000-$125,000

Not covered by Employer Plan

When Filing Status Single or married filing jointly with a spouse who also is not covered
  • 2020: No Limit
  • 2021: No Limit
When Filing Status is Married filing jointly with a spouse who is covered
  • 2020: $196,000-$206,000
  • 2021: $198,000-$208,000

Annual Contribution Limits

The amount you can contribute to all of your Traditional and Roth IRAs combined is 100% of your taxable compensation,5 up to the maximums listed below. 



Contribution limit if you're under age 50

Traditional IRA

Filing Status, Single
  • 2020: $6,000
  • 2021: $6,000
Filing Status, Married Filing Jointly5
  • 2020: $12,000
  • 2021: $12,000

Roth IRA

Filing Status, Single
  • 2020: $6,000
  • 2021: $6,000
Filing Status, Married Filing Jointly5
  • 2020: $12,000
  • 2021: $12,000


Contribution limit if you're age 50 or older

Traditional IRA

Filing Status, Single
  • 2020: $7,000
  • 2021: $7,000
Filing Status, Married Filing Jointly5
  • 2020: $14,000
  • 2021: $14,000

Roth IRA

Filing Status, Single
  • 2020: $7,000
  • 2021: $7,000
Filing Status, Married Filing Jointly5
  • 2020: $14,000
  • 2021: $14,000

You can choose to have both a Traditional and Roth IRA, but remember, the IRS looks at combined total contributions for all IRAs, including those you hold at other companies. 

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1 State and local taxes may apply.
2 Estate tax may apply.
3 Modified Adjusted Gross Income (MAGI) is your Adjusted Gross Income (AGI) with standard deductions included.
4The SECURE Act, effective January 1, 2020, changed the age at which RMDs begin.
          If you were born before 7/1/1949, you must begin RMDs at age 70½.
          If you were born on or after 7/1/1949, you must begin RMDs at age 72.
5Exception for Married Filing Jointly: An employed spouse may contribute to a separate IRA on behalf of a spouse who has little or no income. The amount of the couple’s combined contributions can’t be more than the taxable compensation reported on their joint return. For more information, refer to Spousal IRA sections in IRA Publication 590-A.

IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.

Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.

This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. There are different options available for your retirement plan investments. You should consider all options before making a decision. Our representatives can help you evaluate all of your distribution options.