Yes, Acorns Later is our IRA (or "Individual Retirement Account"). An IRA can help you take advantage of tax benefits while you invest for your retirement.
We offer 3 different types of IRA plans: traditional, Roth, and SEP.
Each of these IRA plans has different rules — there are eligibility requirements, contribution limits, and even income limits, not to mention potential penalties from the IRS if you start withdrawing too soon.
We can help by recommending an IRA plan for you and your long-term goals. Our Later portfolios are age-based, which means we'll adjust your investments on your timeline to retirement.
Here are the basics for our Later IRA plans:
- Traditional IRA: A traditional IRA plan allows you to invest money that hasn't been taxed yet (sometimes this is called "pre-tax dollars"). Taxes are paid on that money when you hit retirement age (59 ½, according to the IRS) and start withdrawing from a traditional IRA. But you'll have had a chance to save on your tax bill and maybe even invest more now, giving your money more time in the market.
- Roth IRA: With a Roth IRA, you contribute after-tax dollars (money that's already been taxed by the IRS), but at retirement age, you can withdraw that money tax-free. That means your money will have had the chance to grow in the market for as long as you've had it invested — and you won't be taxed on those earnings!
- SEP IRA: A SEP IRA stands for "Simplified Employee Pension IRA" — it's specifically for small-business owners and anyone who's self-employed. A SEP IRA can be a great option if you don't have a 401(k) through work
Check out Learn in your Acorns app to find out more about Acorns Later and how it works.