IRA and Roth IRA Earning 4%: Simple, Safe Retirement Savings
Індивідуальний пенсійний рахунок (IRA) – це один із найкращих і найпростіших способів заощадити на майбутнє. Ми розмовляємо українською.
The short answer: A Providence Traditional IRA or Roth IRA currently earns 4% a year, with a 3% lifetime guaranteed minimum, no fees and a $1,000 minimum opening deposit. A Traditional IRA can lower your taxes today. A Roth IRA lets your savings grow tax-free for retirement. Neither is tied to the stock market.
The current rate is set by Providence’s board and can change. It never drops below the guaranteed minimum.
What is an IRA?
An IRA (Individual Retirement Account) is a savings account with tax benefits, made for retirement. You open it yourself, so it stays with you when you change jobs, and you can have one even if you already have a 401(k) at work.
At Providence, your IRA is held in a fixed annuity. It earns a declared interest rate with a guaranteed minimum, so your balance doesn’t drop when the stock market does. Learn more about how IRAs work on Investor.gov.
Traditional IRA vs. Roth IRA
Both earn the same 4% at Providence. The main difference is when you pay taxes: now or later.
Traditional IRA: tax break now
- Contributions may be tax-deductible, which lowers this year’s tax bill
- Interest grows tax-deferred
- Withdrawals in retirement are taxed as income
- Withdrawals must start at age 73
Roth IRA: tax-free later
- You contribute money you’ve already paid tax on
- Interest grows tax-free
- Qualified withdrawals in retirement are 100% tax-free
- No required withdrawals during your lifetime
Not sure which one to pick? Many people in their 20s and 30s choose a Roth IRA, because they’re often in a lower tax bracket now than they will be later. A Traditional IRA can make more sense if you want to reduce your taxes this year. You can also have both. Your tax advisor can help you decide.
How much can I contribute in 2026?
| 2026 IRS limits | Amount |
|---|---|
| Total yearly contribution, Traditional and Roth IRAs combined | $7,500 |
| If you are 50 or older (includes $1,100 catch-up) | $8,600 |
| Roth IRA: contributions phase out (single) | $153,000 to $168,000 income |
| Roth IRA: contributions phase out (married filing jointly) | $242,000 to $252,000 income |
| Traditional IRA deduction phases out if you have a workplace plan (single) | $81,000 to $91,000 income |
| Traditional IRA deduction phases out if you have a workplace plan (married filing jointly) | $129,000 to $149,000 income |
Source: IRS 2026 limits. Income means modified adjusted gross income. You can make your 2026 contributions until the April 2027 tax filing deadline.
What your IRA could grow to
If you contribute the full $7,500 a year (about $625 a month) at 4%, here’s roughly what you could have by age 65:
| If you start at age | You contribute in total | Your balance at 65 (approx.) |
|---|---|---|
| 25 | $300,000 | $738,700 |
| 30 | $262,500 | $571,100 |
| 40 | $187,500 | $321,300 |
Illustration only. It assumes $625 a month at 4% a year, compounded monthly, with the rate staying the same for the whole period. It does not include taxes. Actual results will vary. Try your own numbers with our retirement calculators.
Why tax-free growth matters
Because Roth IRA interest is never taxed when you follow IRS rules, 4% tax-free is worth more than 4% in a regular savings account or CD, where you pay tax on the interest every year. Here’s what a taxable account would need to earn to match it:
| Your federal tax bracket | 12% | 22% | 24% | 32% | 35% | 37% |
|---|---|---|---|---|---|---|
| Taxable rate needed to equal 4% tax-free | 4.55% | 5.13% | 5.26% | 5.88% | 6.15% | 6.35% |
Federal income tax only. State taxes would raise these numbers. A Traditional IRA is tax-deferred, not tax-free, so you pay tax on withdrawals.
What you can use a Providence IRA for
- Retirement income for life. Withdraw on your own schedule, or turn your savings into monthly payments.
- Your family’s future. Name a beneficiary, and your savings pass to your loved ones, or to a charity, if you die.
- A first home or college. The IRS allows early withdrawals for a first home (up to $10,000) and college costs without the 10% penalty. See our College Tuition Fund.
- A safe home for your 401(k). Changing jobs? We’ll roll over your 401(k) directly, with no tax or penalty.
Can I take money out early?
Yes, but there are rules. In general, withdrawals before age 59½ owe a 10% IRS additional tax plus income tax, unless an IRS exception applies.
With a Roth IRA, the money you put in can come out without tax or penalty at any time. To take out the earnings tax-free, you generally need to be 59½ or older and have had the Roth open at least five years.
Separately, Providence may charge for withdrawals made in the first six years, so plan to keep this money for the long term.
How to open a Providence IRA or Roth IRA
- Talk to us. Call 877-857-2284 or (215) 627-2445, or email sales@provassn.com. We’ll help you choose Traditional or Roth, in English or Ukrainian.
- Fill out the application. Print the preliminary annuity and IRA application, or find it on our Forms page.
- Make your first deposit of $1,000 or more, or transfer an existing IRA or 401(k).
Want to save more than the IRA limit? A Providence annuity has no IRS yearly limit. Self-employed? See our SEP IRA and SIMPLE IRA plans. Looking for tax-free protection for your family? See Whole Life Insurance.
Providence Association is a not-for-profit Ukrainian Catholic fraternal benefit society, serving members since 1912. We are licensed in Pennsylvania, New Jersey and Michigan.
IRA and Roth IRA FAQ
What interest rate does a Providence IRA or Roth IRA pay?
Providence Traditional IRAs and Roth IRAs currently earn 4% a year, with a 3% lifetime guaranteed minimum. The rate is set by Providence's board and can change, but it never falls below the guaranteed minimum.
What is the minimum deposit to open a Providence IRA?
The minimum opening deposit for a Providence Traditional IRA or Roth IRA is $1,000. Providence charges no maintenance fees, administrative charges or loads.
How much can I put in an IRA in 2026?
For 2026, the IRS limit is $7,500 a year across all of your Traditional and Roth IRAs combined, or $8,600 if you are 50 or older.
Should I choose a Traditional IRA or a Roth IRA?
A Traditional IRA may lower your taxes now, and you pay tax when you withdraw in retirement. A Roth IRA uses after-tax money, and qualified withdrawals are tax-free. Many younger savers choose a Roth IRA. A tax advisor can help you decide.
Can I have a Providence IRA if I already have a 401(k)?
Yes. You can contribute to an IRA even if you have a 401(k) at work. The workplace plan may limit how much of a Traditional IRA contribution you can deduct, depending on your income.
Is my Providence IRA invested in the stock market?
No. Providence IRAs are held in a fixed annuity that earns a declared interest rate with a guaranteed minimum, so your balance does not go down when the stock market falls.
This page is general information, not tax, legal or investment advice. Rates and terms can change. IRA and annuity products are not bank deposits and are not FDIC insured. Please consult your tax advisor about your situation. Last updated October 2026.