Traditional IRAs — How Can a Traditional IRA Be Opened?: IRA Contributions and Transfers (2025 IRS Guide)
This guide covers “Traditional IRAs — How Can a Traditional IRA Be Opened?” within ira contributions and transfers. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.
Adapted from Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs), published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.
Traditional IRAs — How Can a Traditional IRA Be Opened?
You can open different kinds of IRAs with a variety of organizations. You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. You can also open an IRA through your stockbroker. Any IRA must meet Internal Revenue Code requirements. The requirements for the various arrangements are discussed below.
Kinds of traditional IRAs.
Your traditional IRA can be an individual retirement account or annuity. It can be an employer or employee association trust account. A traditional IRA can also be used to accept employer contributions under a SEP arrangement (sometimes referred to as a traditional SEP IRA).
Individual Retirement Account
An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. The account is created by a written document. The document must show that the account meets all of the following requirements.
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The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.
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The trustee or custodian generally can’t accept contributions of more than the deductible amount for the year. However, rollover contributions and employer contributions to a traditional SEP IRA can be more than this amount.
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Contributions, except for rollover contributions, must be in cash. See Rollovers, later.
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You must have a nonforfeitable right to the amount at all times.
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Money in your account can’t be used to buy a life insurance policy.
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Assets in your account can’t be combined with other property, except in a common trust fund or common investment fund.
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You must start receiving distributions by April 1 of the year following the year in which you reach age 73. See Pub. 590-B for more information about RMDs and other distribution rules.
Individual Retirement Annuity
You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company.
An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments.
An individual retirement annuity must meet all the following requirements.
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Your entire interest in the contract must be nonforfeitable.
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The contract must provide that you can’t transfer any portion of it to any person other than the issuer.
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There must be flexible premiums so that if your compensation changes, your payment can also change. This provision applies to contracts issued after November 6, 1978.
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The contract must provide that contributions can’t be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund.
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Distributions must begin by April 1 of the year following the year in which you reach age 73. See Pub. 590-B for more information about RMDs and other distribution rules.
Individual Retirement Bonds
The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. The bonds have the following features.
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They stop earning interest when you reach age 70½. If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier.
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You can’t transfer the bonds.
SIMPLE IRA Plans and SIMPLE IRAs
A SIMPLE IRA plan is a tax-favored retirement plan that certain small employers (including self-employed employees) can set up for the benefit of their employees. Contributions to the employees’ SIMPLE IRA are made by the employers and are made up of salary reduction contributions and employer contributions which are either matching contributions or nonelective contributions. A SIMPLE IRA can be either a traditional SIMPLE IRA or a Roth SIMPLE IRA but are subject to different rules than traditional or Roth IRAs. See Pub. 560 for more information about SIMPLE IRA plans and SIMPLE IRAs.
Simplified Employee Pension (SEP) Arrangements and SIMPLE IRAs
A SEP arrangement is a written plan that allows an employer to make contributions to an employee’s traditional SEP IRA or Roth SEP IRA. Employer contributions to SEP IRAs are subject to different limits than individual contributions to traditional and Roth IRAs. Distributions from SEP IRAs are subject to traditional and Roth IRA rules. See Pub. 560 for more information about SEP arrangements and SIMPLE IRAs.
Employer and Employee Association Trust Accounts
Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members, provided certain requirements are met (such as separate accounting). The requirements for individual retirement accounts apply to these traditional and Roth IRAs.
Required Disclosures
The trustee or issuer (sometimes called the sponsor) of your traditional IRA must generally give you a disclosure statement at least 7 days before you open your IRA. However, the sponsor doesn’t have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA.
The disclosure statement must explain certain items in plain language. For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. This explanation must appear at the beginning of the disclosure statement.
If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. These requirements apply to all sponsors.
Using the guidance
Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.
Sources and further reading
- Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs): Traditional IRAs — How Can a Traditional IRA Be Opened? — Internal Revenue Service; 2025 edition.
The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.