This is not investment advice. The information provided is for educational and informational purposes only and does not constitute a recommendation to buy or sell any financial product.
Brokerage accounts come in many types, each with different tax treatment, contribution limits, and withdrawal rules. Choosing the right account type is just as important as choosing the right broker.
Account types at a glance
| Account Type | Tax Treatment | Contribution Limit (2026) | Best For |
|---|---|---|---|
| Individual taxable | Taxed on gains and dividends annually | No limit | General investing |
| Joint (JTWROS) | Same as individual | No limit | Couples, shared finances |
| Traditional IRA | Tax-deferred; deductible contributions | $7,000 ($8,000 if 50+) | Pre-tax retirement saving |
| Roth IRA | Tax-free growth and withdrawals | $7,000 ($8,000 if 50+) | Post-tax retirement saving |
| SEP IRA | Tax-deferred | 25% of compensation, max $66,000 | Self-employed, small business |
| Rollover IRA | Tax-deferred | N/A (rollover only) | Moving old 401(k) assets |
| Custodial (UTMA/UGMA) | Taxed at child's rate (up to limits) | No limit (gift tax applies) | Investing for minors |
| Trust account | Depends on trust type | No limit | Estate planning |
| Corporate/LLC | Taxed at entity level | No limit | Business investing |
Individual taxable account
This is the standard brokerage account. You deposit after-tax money, buy investments, and pay taxes on dividends and capital gains in the year they occur. There is no contribution limit and no withdrawal restrictions. Most investors should open this account type first.
Retirement accounts (IRAs)
Traditional IRA: Contributions may be tax-deductible depending on your income and whether you have a workplace retirement plan. Investments grow tax-deferred. You pay ordinary income tax on withdrawals in retirement. Required minimum distributions (RMDs) start at age 73.
Roth IRA: Contributions are made with after-tax money and are NOT tax-deductible. Investments grow tax-free, and qualified withdrawals in retirement are tax-free. There is no RMD during your lifetime. Income limits apply: in 2026, single filers earning over $146,000 (MAGI) cannot contribute directly to a Roth IRA.
SEP IRA: Simplified Employee Pension for self-employed individuals and small business owners. Contributions are tax-deductible and grow tax-deferred. Higher contribution limits than traditional/Roth.
See the IRA and retirement accounts guide for details.
Specialized accounts
Joint accounts: Owned by two people, typically with right of survivorship. When one owner dies, the assets pass directly to the other. Used by married couples.
Custodial accounts (UTMA/UGMA): An adult controls the account for a minor. Assets transfer to the child at age 18-25 depending on the state. Contributions are irrevocable gifts.
Trust accounts: Held in the name of a trust for estate planning purposes. The trustee manages the account according to the trust document.
Margin vs cash accounts. A cash account requires you to pay for trades in full. A margin account allows you to borrow from the broker to buy more securities. See the cash vs margin comparison.
Common questions
Should I open a taxable account or an IRA? If you are saving for retirement, max out your IRA first for the tax advantages. If you want flexibility to withdraw before retirement, open a taxable account.
Can I have multiple accounts at the same broker? Yes. You can have an individual taxable account, a Roth IRA, and a joint account all at Fidelity, for example.
What is the best account type for a beginner? Start with a taxable brokerage account. It has no contribution limits or withdrawal restrictions, so you can learn without commitment. Add an IRA once you have income.
Where to start
Open an individual taxable account with one of the best brokers for beginners. Once you are comfortable, open a Roth IRA. Read the account types hub for detailed guides on each type.