Individual investor access
Manage your individual account online and explore investment insights and market commentary.
Retirement plans
Traditional and Roth IRAs
A solution for individuals wanting to control their retirement outlook.
Overview
Contributing to an IRA can help you prepare for retirement even if you're already contributing to an employer-sponsored retirement plan. Depending on your tax bracket, you may be eligible to contribute to a traditional IRA, a Roth IRA, or both.
Features |
Traditional IRA¹ |
Roth IRA¹ |
|---|---|---|
| Annual contribution limit for 2023 is generally the lesser of $6,500 ($7,500 if you’re 50 or older) or your taxable compensation for the year. Note: This amount is aggregated across traditional and Roth IRAs. Rollover contributions do not apply. | Income requirement must be met to qualify for a tax deduction. | Income requirement must be met to contribute. |
| Annual contributions up to the annual limit must be made by April 15 to be considered a prior-year contribution. | ✓
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✓
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| IRA may receive an eligible rollover distribution from a qualified plan (aka a rollover IRA). |
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X |
| Tax deductions depend on salary level and whether the IRA owner is eligible to participate in an employer-sponsored retirement plan. | ✓
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X |
| Contributions are nondeductible. | X | ✓
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| Earnings accumulate on a tax-deferred basis. | ✓
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✓
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| Qualified distributions are tax-free. | X | ✓
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| Tax-free and penalty-free withdrawals of earnings are permitted after five years. | X | ✓
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| Tax-free and penalty-free withdrawals of contributions are permitted at any time. | X | ✓
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| For married couples filing jointly, a nonworking spouse may also fund based on the earned income of the working spouse (up to the annual limit). | ✓
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The information does not constitute tax advice. Please consult your tax advisor about your particular situation.
Invesco’s competitive edge
As a leading independent global investment management firm, investors benefit from our commitment to investment excellence, depth of investment capabilities, and organizational strength:
- Maximize your retirement by working with your financial professional to create an asset allocation that aligns with your investment and risk objectives.
- Explore our mutual fund offerings, which span every major asset class, including US and international equity and fixed income portfolios and target-risk funds.
- Invest in share classes A, C, and R.
Work with your financial professional
Optimize your retirement by working with your financial professional to select an asset allocation that aligns with your investment and risk objectives.
Account access and support
Plan sponsor access
Retirement Plan Manager is an online tool that allows sponsors to submit and fund payroll contributions and generate reports.Live support
Speak with a Client Services representative for account assistance, Monday through Friday, from 7:00 a.m. to 6 p.m. CT.Call us at 800 959 4246
Automated investor support
Obtain fund share price, check account balance, and make account transactions 24 hours a day, seven days a week.Call us at 800 245 5463
Key information about traditional IRAs
An individual retirement account (IRA) is a personal savings plan that may provide tax advantages for setting aside money for retirement. Contributions made to a traditional IRA may be used as a tax deduction dependent upon:
- Active participation in an employer-sponsored retirement plan at any time during the year by the account owner or their spouse.
- The individual’s tax filing status.
- The individual's modified adjusted gross income.
Traditional IRA |
Roth IRA |
|---|---|
Anyone can contribute regardless of income. |
Employees must meet income eligibility requirements to contribute directly. |
| Contributions may be fully or partially deductible if certain requirements are met. | Contributions are not tax-deductible. |
Contributions generally lower taxable income during the year. |
Return of contributed amount (basis) is generally tax-free and penalty-free regardless of age or holding period. |
| Qualified distributions will be subject to ordinary income tax. | Earnings are tax-free when the account is held for at least five years and a qualifying event is attained. |
| The IRS mandates a required minimum distribution for the original account owner at age 73.² | The IRS does not mandate required minimum distributions for the original account owner. |
The maximum contribution permitted is the lesser of 100% of compensation or the amount shown below. Contributions may be divided between the Roth IRA, if eligible, and the traditional IRA as long as the aggregate contributions between both IRAs do not exceed the contribution limits stated.
Tax year |
Contribution limit |
Catch-up limit |
Age 50 and older contribution limits |
|---|---|---|---|
2019-2022 |
$6,000 |
$1,000 |
$7,000 |
| 2023 | $6,500 | $1,000 | $7,500 |
As a general rule, most traditional IRA distributions are subject to ordinary income tax in the year you receive the distribution. Distributions taken prior to the owner reaching age 59 ½ are subject to an additional 10% tax penalty, also known as a premature penalty. The following are exceptions to the 10% penalty:
- Disability
- Series of substantially equal periodic payments
- Medical insurance premiums while unemployed
- First home purchase
- Higher education expenses
- IRS levy
- Qualified reservist distribution
- Birth or adoption of a child
- Death
Yes, 401(k) balances can be rolled over into an IRA. Pretax balances are rolled over into a traditional IRA, and Roth 401(k) balances, if applicable, are rolled over into a Roth IRA. Rollovers can occur in one of two ways:
1. A direct rollover is a trustee-to-trustee transfer between a qualified plan and an IRA for the same shareholder.
o The shareholder must have attained a distributable event, such as retirement, severance of employment, disability, or death.
o The distributing plan will report the direct rollover distribution on IRS Form 1099-R, and the receiving IRA custodian will report the rollover contribution on IRS Form 5498.
2. An indirect rollover is a tax-free reinvestment (contribution) of a distribution from an eligible retirement plan into another eligible retirement plan within 60 days.
o Indirect rollovers are reportable. The shareholder will receive IRS Form 1099-R from the distributing plan and IRS Form 5498 for the rollover contribution from the receiving IRA custodian.
o Invesco policy: Invesco doesn’t police acceptance of the 60-day period for indirect rollover contributions. However, if Invesco receives an Invesco Self-Certification for Late Rollover Contributions Form or IRS Model Letter, along with a rollover contribution, then we will report the rollover contribution with a self-certifying waiver of the 60-day requirement on IRS Form 5498.
Key information about Roth IRAs
A Roth IRA is a personal savings plan where regular nondeductible contributions accrue tax-free earnings. Contribution amounts may be withdrawn tax-free and penalty-free at any time. Additionally, any earnings made are not subject to federal income tax as long as the account has been maintained for at least five years and qualifies for a distributable event, such as age 59 ½, disability, death, or first-time home buyer expenses.
Roth IRA owners can take out Roth contributions (Roth basis) at any time without paying taxes or penalties. As an added benefit, Roth earnings are not subject to federal income tax if certain requirements are met. To withdraw earnings from a Roth IRA without owing taxes or penalties, the owner must be over 59 ½ and the account also must be at least five years old. This stipulation is known as the five-year rule. Additionally, unlike other sources of retirement savings, Roth IRAs don't have minimum distribution requirements and can be part of an estate planning strategy.
Return of Roth contributions (return of basis) is generally tax-free and penalty-free regardless of age or holding period. Since contributions to a Roth IRA are nondeductible, the dollar amount of the contributions (basis) may be withdrawn at any time without taxes or penalties. Withdrawal of conversion amounts, however, may be subject to a 10% recapture tax if withdrawn before the five-year recapture period is over.
In order to contribute to a Roth IRA, the owner must meet two requirements:
- The depositor (or their spouse if filing a joint tax return) received taxable compensation during the year.
- The depositor must meet certain modified AGI requirements as detailed under Publication 590A, Appendix A and B, on IRS.gov.
Tax year |
Contribution limit |
Catch-up limit |
Age 50 and older contribution limits |
|---|---|---|---|
2019-2022 |
$6,000 |
$1,000 |
$7,000 |
| 2023 | $6,500 | $1,000 | $7,500 |
As a general rule, contributed Roth IRA amounts may be withdrawn tax-free and penalty-free at any time because these amounts have already been taxed. At age 59 ½, investment earnings can be withdrawn without taxes or penalties if the Roth IRA account has been open for a minimum of five years.
Earnings distributions prior to age 59 ½ and the five-year holding period are subject to federal taxes and penalties. However, there are penalty exceptions:
- 59 ½
- Disability
- Series of substantially equal periodic payments
- Medical insurance premiums while unemployed
- First home purchase
- Higher education expenses
- IRS levy
- Qualified reservist distribution
- Birth or adoption of a child
- Death
Other retirement plan options
Explore our other retirement plans designed to help you get more out of retirement.
Footnotes
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1
An annual account maintenance fee of $25 will be deducted annually from the account if the total assets held in my retirement and non-retirement accounts held directly at Invesco, excluding 529 plans, is less than $50,000 on the day the fee is assessed.
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2
Impacts retirement investors born during or after 1951. As part of legislation in December 2022, SECURE Act 2.0 was a provision that changed the commencement age for mandatory withdrawals from retirement accounts, otherwise known as required minimum distributions (RMDs). The age changed from 72 to 73, meaning investors who turn 72 in 2023 are not mandated to take a distribution until 2024. Investors who are currently receiving RMDs must ensure they meet the minimum distribution amount by December 31, 2023, to avoid penalties.
