How to open a Traditional IRA

This article is for informational purposes only and does not constitute tax, legal or financial advice. Tax rules and retirement account regulations can vary by individual circumstance. You should consult a qualified tax or financial professional before making any retirement or investment decisions.

What is a Traditional IRA?

A Traditional IRA is an individual retirement account that allows you to contribute earned income and potentially receive a tax deduction in the year you contribute. Unlike a Roth IRA, contributions may be made with pre-tax dollars, depending on your income and access to a workplace retirement plan.

Money inside a Traditional IRA grows on a tax-deferred basis. This means you generally don’t pay taxes on investment gains or dividends while the funds remain in the account. Taxes are typically owed later, when you take withdrawals in retirement.

Traditional IRAs are often used by individuals who want to lower their current taxable income or who don’t have access to a 401(k) or similar employer plan. The account is opened and managed independently, giving you control over provider choice and investment selection.

While there are no income limits to open a Traditional IRA, tax deductibility rules can vary. Contribution limits, earned income requirements and withdrawal rules are set by the IRS and may change over time.

Compare Roth and Traditional IRAs

How to open a Traditional IRA

1. Confirm you’re eligible

Before opening a Traditional IRA, it’s important to understand who qualifies and how contributions work. Eligibility rules are generally broader than many people expect.

Who can open a Traditional IRA?

• Individuals with earned income.
• Spouses using a spousal IRA, if household income qualifies.
• Minors with earned income, through a custodial Traditional IRA (where permitted).

Earned income requirement

To contribute to a Traditional IRA, you must have earned income for the year. Earned income typically includes wages, salaries, tips, commissions and self-employment income. Passive income sources – for example, dividends, interest or rental income – don’t qualify on their own.

So, if you don’t have earned income, you can’t contribute (even if you have savings available).

No income limit to open an account

Unlike Roth IRAs, Traditional IRAs don’t have income limits that prevent you from opening or funding an account. High earners can still contribute, though tax deductibility may be limited depending on your circumstances.

IRA contribution limits

The IRS sets annual contribution limits that apply across all Traditional and Roth IRAs combined. These limits are adjusted periodically and apply regardless of how many IRA accounts you hold.

Age rules

There’s no maximum age for contributing to a Traditional IRA. As long as you have earned income, you may continue making contributions at any age.

2. Choose where to open your Traditional IRA

Traditional IRAs are offered by a variety of financial institutions. The provider you choose can affect costs, investment access, tools and how you manage your account over time.

Common provider types

• Brokerages usually offer the broadest investment selection, including stocks, ETFs, bonds and mutual funds.
• Banks often provide simpler Traditional IRAs focused on Certificates of Deposit (CDs) or savings-based options.
• Robo-advisors automate portfolio construction and rebalancing based on your goals and risk tolerance.

Key features investors compare

While each investor has their own considerations, there are generally some similarities between what they look for in an IRA. Costs matter, including account fees, trading fees and fund expense ratios. Investment range is also important for those who want flexibility. Many investors also evaluate digital tools, educational resources and customer support.

Security features and account protections are worth reviewing as well, especially for long-term retirement savings.

3. Gather your documents

Having the right information ready can speed up the application process. Most providers will request:

• Your Social Security number
• Employment and income details
• Beneficiary information
• A linked bank account for funding
• Basic personal identification information

Some providers may also ask questions about the purpose of the account to meet regulatory requirements.

4. Open your Traditional IRA

Most Traditional IRAs can be opened online. During the application, you’ll confirm personal information, review disclosures and add your beneficiaries. Identity verification is typically handled digitally, using security questions or document checks. Once approved, your account is officially open but won’t begin investing until it’s funded.

5. Fund your Traditional IRA

Funding your account is what activates it. Contributions must stay within annual IRS limits and be supported by earned income. The IRA contribution limit for 2026 is $7,500 for individuals under the age of 50 and $8,600 for those 50 or older, including a $1,100 catch-up contribution. Contribution deadlines generally align with the tax filing deadline for the year.

Ways to fund a Traditional IRA

• Direct contributions from a linked bank account.
• Transfers from another Traditional IRA.
• Rollovers from eligible retirement plans, such as a 401(k), following IRS rules.

Deductible vs. non-deductible contributions

Some Traditional IRA contributions may be fully or partially deductible, depending on income and whether you or your spouse are covered by a workplace retirement plan. Non-deductible contributions must be tracked using IRS Form 8606.

6. Select your investments

Once funded, your Traditional IRA remains in cash until you choose investments. Available options depend on your provider and may include stocks, ETFs, bonds, mutual funds CDs or Treasuries. Each investment carries different risks and potential for returns. 

Certain assets, such as collectibles and life insurance, aren’t permitted in IRAs.

7. Review and automate

Setting up automatic contributions can help you stay consistent and avoid missed deadlines. Periodic reviews allow you to adjust investments, rebalance portfolios and update beneficiaries as your situation changes.

Annual contribution limits and tax rules can change, so reviewing your setup regularly can help to keep your strategy aligned.

The Crypto.com Stocks Individual Retirement Account (IRA)

Eligible US users can open a retirement account through the Crypto.com Stocks IRA and manage it on the Crypto.com App. Here, you can contribute new funds, transfer an existing IRA or roll over assets from an eligible employer plan. You can invest in US-listed stocks and ETFs with commission-free trades and fractional shares.

Standard IRS rules apply and IRA features are subject to regulatory requirements and availability.

Open a Crypto.com Stocks IRA

FAQs about opening a Traditional IRA

How do I open a Traditional IRA?
You choose a provider, complete an application, submit required personal and financial information and fund the account. Once funded, you can start investing.

Where can I open a Traditional IRA?
Traditional IRAs are available through brokerages, banks and robo-advisors. Each type of provider generally offers a different set of assets to invest in. 

Who qualifies for a Traditional IRA?
Anyone with earned income can contribute to a Traditional IRA, regardless of income level.

Do Traditional IRAs have income limits?
There are no income limits to open or fund the IRA, but tax deductibility may be limited. Deduction rules depend on income and whether you or your spouse are covered by a workplace plan.

Can I have both a Traditional and Roth IRA?
Yes, you can hold both types, but total contributions across all IRAs must stay within annual limits. The IRS contribution cap applies to the combined amount, not to each account separately.

How much do I need to open a Traditional IRA?
Many providers allow you to open a Traditional IRA with little or no minimum. The amount you can contribute each year is capped by IRS limits and must be supported by earned income.

Are Traditional IRA contributions tax deductible?
Traditional IRA contributions may be fully, partially or not deductible, depending on income and access to an employer-sponsored retirement plan. Non-deductible contributions must be reported to the IRS.

When should I open a Traditional IRA?
You can open a Traditional IRA at any time, but contributions for a given tax year must be made by that year’s tax filing deadline. Opening earlier allows more time for tax-deferred growth.

This is informational content sponsored by Crypto.com and should not be considered as investment advice. 

Foris Capital US LLC (“FCUL” or referred to herein as “Crypto.com Stocks”) is a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a Member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). FCUL does not provide investment, legal or tax advice. Any information provided is general in nature and should not be considered advice. Consult an attorney or tax professional regarding your specific situation For further information about FCUL, please visit FINRA BrokerCheck.FCUL is a subsidiary of Crypto.com. 

FCUL is a separate entity from Crypto.com, Foris DAX, Inc., and other affiliated Foris companies. FCUL does not engage in the sale, transfer or custody of crypto currencies or digital assets. Crypto.com is a separate entity from FCUL and does not engage in the securities business. Customer balances and crypto holdings held and transacted at Crypto.com and other entities outside of FCUL are not covered by SIPC insurance and are separate from securities transactions and holdings at FCUL. Fractional shares are not available for all equities.

Crypto.com IRA services are offered to eligible U.S. users only. Eligible customers can open a Traditional IRA or Roth IRA with Foris Capital US, which supports stocks and cash, and a separate Traditional IRA or Roth IRA with Foris DAX Trust Company, LLC, which supports digital assets only. All services and features related to digital assets apply to the IRA provided by Foris DAX Trust Company, LLC, not by Foris Capital US, LLC. IRA features are subject to regulatory requirements and availability. All accounts are subject to eligibility requirements, and applicable terms and conditions. Users should consult with independent tax and financial advisors regarding their individual situation.

Stocks Recurring Buy and Whale Baskets are features only available in the IRA provided by Foris Capital US, LLC, not by Foris DAX Trust Company, LLC

Crypto Recurring Buys are features only available in the IRA provided by Foris DAX Trust Company, LLC.

All investments involve risk, and not all risks are suitable for every investor. The value of securities may fluctuate and as a result, clients may lose more than their original investment. Past performance does not guarantee future results.