It’s never too late to start saving for your retirement. 

About Individual Retirement Accounts (IRAs)

How Individual Retirement Accounts Work
Like the name implies, IRAs are retirement savings accounts that individuals can set up. You don’t need your employer to do it. IRAs are retirement accounts that offer tax advantages over other kinds of savings accounts. Some people who save for retirement in their employer’s plan also save money in an IRA. Some people have only an IRA because they don’t have access to a plan at work.

An IRA can be set up through a financial institution, insurance company, mutual fund or stockbroker. The most common types of IRAs are the Traditional and Roth IRA. Both types of accounts can invest in stocks, bonds, mutual funds and other investments and allow penalty-free withdrawals after age 59 ½. The difference between the two is how they are taxed.

Traditional IRA

  • Contributions may be tax deductible, depending on your income and whether your employer offers a retirement plan
  • You will pay taxes on your contributions and earnings when you withdraw your money
  • Possible penalty for withdrawals before age 59 ½
  • No income restrictions

Roth IRA

  • Contributions are not tax deductible
  • No taxes on withdrawals and earnings, when conditions are satisfied
  • Possible penalty for withdrawals before age 59 ½
  • Certain income restrictions apply

These are just the highlights. Visit for more information on eligibility, annual contribution limits and taxation.

View a short video on the difference between a Traditional and a Roth IRA here:

Set Up Automatic Deposits

Saving for retirement through automatic deposits is the best way to ensure you pay yourself first. Automatic deposit is when you set up a schedule so that a specific amount of money is automatically transferred from your bank account to your IRA on a regular basis.

Retirement Savings Contributions Credit (Saver's Credit)

You may be eligible to receive a tax credit for putting money in a retirement plan. The amount of the credit is 50%, 20% or 10% of your retirement plan or IRA account contributions depending on your adjusted gross income. The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly). 

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IRA Deduction Limits

You may be able to claim a deduction on your individual federal income tax return for the amount you contributed to your IRA.

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Retirement Plans For Self-Employed Individuals

Self-employed individuals have the ability to save for retirement on a tax-deferred basis as well. Plans described below offer a high level overview of types of plans that may be available to self-employed individuals. These plans are subject to specific legal requirements and annual contribution limits.

Solo 401(k)

A Solo 401(k) is a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401(k) plan. The business owner wears two hats in a 401(k) plan: employee and employer. Contributions can be made to the plan in both capacities.

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Simplified Employee Pension (SEP IRA)

A SEP IRA provides business owners with a simplified method to contribute toward their employees’ retirement as well as their own retirement savings. Contributions are made to an Individual Retirement Account or Annuity (IRA) set up for each plan participant (a SEP-IRA). A SEP-IRA account is a traditional IRA and follows the same investment, distribution, and rollover rules as traditional IRAs. 

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Savings Incentive Match Plan for Employees (SIMPLE IRA)

A SIMPLE IRA plan provides small employers with a simplified method to contribute toward their employees’ and their own retirement savings. Employees may choose to make salary reduction contributions and the employer is required to make either matching or nonelective contributions. Contributions are made to an IRA set up for each employee.

Learn more at

Retirement Plans for Individuals

Of course, in addition to the types of plans listed above, self-employed people can also consider Individual Retirement Accounts (IRAs). More information about IRAs is in the section called About Individual Retirement Accounts (IRAs).

Learn more about self-employed retirement calculations at

Resources for Individuals


Estimate how much to save each year to accumulate enough money for your retirement. 

Learn More

Review fast and fun educational videos to empower your financial well-being.

Retirement Savings Education

Understand your retirement savings options regardless of how old you are and where you are in your career.

Retirement Decisions

Raise awareness, increase skills and knowledge related to personal finance.

Retirement Savings Tips

Basic information about planning for retirement and understanding your retirement plan.

Social Security

Learn how much Social Security benefit you’ll receive based on when you expect to claim it.

Do you have a retirement plan at work?

If your employer offers a retirement plan, many retirement experts say you should take advantage of it. The first step is to understand what type of plan it is and how it works.

Some employers offer a traditional pension plan, sometimes called a defined benefit plan. In this type of plan, the employer makes the contributions and guarantees the participant a specified monthly benefit at retirement. Often, the benefit is based on factors such as the employee’s salary, age, and the number of years worked for the employer. You may need to stay a certain number of years before you are eligible to receive any benefits.

If your employer offers a defined contribution retirement plan, like a 401(k) plan, you may have to make the decision to participate. As part of that decision, you choose how much to have deducted from your paycheck. Some employers have automatic enrollment 401(k) plans so that you are automatically signed up for the plan unless you opt out. Whether you are automatically enrolled or sign up yourself, try to contribute as much as you can.

Often your contributions are matched up to a set percentage by your employer. If this is the case, make sure your contribution is enough to get the employer’s match; don’t pass up free money for your retirement savings! Your contributions are deducted from your salary pre-tax, and the investment grows tax deferred until you take it out of the plan.


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The Small Business Retirement Marketplace is administered by the Washington Department of Commerce as established in RCW Chapter 43.330.730-750. Plans carried on the Retirement Marketplace are verified by the Department of Financial Institutions and/or the Office of the Insurance Commissioner to meet the requirements set forth in RCW 43.330.732(7) and 735(6)(a).

Enrollment in plans on the Retirement Marketplace is voluntary. Plan enrollment is managed by private financial services firms. Saving through certain plans will not be appropriate for all individuals. Employer facilitation of most retirement savings plans carries certain legal obligations for which employers are entirely responsible. Contributing to a retirement savings plan may offer tax benefits and/or consequences. Other private sector plans not offered on the Retirement Marketplace may charge lower fees. Consult your tax or financial adviser with questions related to investments.

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