Types of Retirement Accounts on Composer

We currently offer Traditional IRAs and Roth IRAs. While both serve the same purpose

of aiding retirement savings, they differ significantly in their tax treatment, withdrawal

rules, and eligibility criteria.

On Composer, you’re able to open one of each account type. We’re unable to open

accounts in the following states: Washington DC, Massachusetts, Illinois, and North Dakota.

The annual contribution limits for both Traditional and Roth IRAs are identical. In 2023,

individuals are allowed to contribute up to $6,500 per year, or $7,500 for those aged 50

or older, which includes a $1,000 "catch-up" contribution. In 2024, individuals are

allowed to contribute up to $7,000 per year, or $8,000 for those aged 50 or older, which

includes a $1,000 "catch-up" contribution. It's important to note that these limits apply to

the total contributions across all IRAs you may have, not per account. These limits are

subject to periodic updates, so staying informed about the current limits is crucial.

Contribution allowances may also be impacted by your spouse’s retirement accounts, if

filing jointly.

Traditional IRAs

Traditional IRAs offer tax-deferred growth, meaning the contributions you make may be

tax-deductible, reducing your taxable income in the contribution year. Almost anyone

with earned income can contribute to a Traditional IRA. There are no income limits,

making it accessible to a broad range of earners. However, the key factor is the tax

deductibility of contributions.

You can read more about Traditional IRAs here:

Roth IRAs offer tax-free growth and withdrawals. Contributions to a Roth IRA are made

with after-tax dollars, meaning there's no tax deduction for the contribution year.

However, the advantage lies in the fact that both the contributions and the earnings can

be withdrawn tax-free after age 591⁄2, provided the account has been open for at least

five years.