The benefits associated with traditional individual retirement accounts (IRAs) are numerous. There are tax advantages, and IRAs offer an impressive range of investment options. In addition, IRAs are flexible, and they allow you to make catch-up contributions once you reach the age of 50. Thanks to compounding returns, IRAs can grow dramatically in value given enough time.

As of mid-2024, 44% of households reported holding at least one IRA, making it one of the most popular ways to save for retirement.

Like other investment vehicles, however, IRAs require that investors follow specific rules, and mistakes can be costly. Here are five of the most common IRA mistakes and how to avoid them.

1. Failure to understand contribution limits

The most you can contribute to a traditional IRA in 2025 is $7,000. If you’re 50 or older, the catch-up contribution boosts that amount to $8,000. If your annual contribution exceeds that limit, you will incur a 6% penalty on the excess amount for each year it remains in the account.

So imagine you accidentally contributed $1,000 too much this year and failed to notice the mistake for two years. That means you’ll owe a 6% penalty this year and 6% on the extra $1,000 again next year.

Automating your contributions is one of the surest ways to prevent a penalty. For example, if you plan to contribute $7,000, you might automate a monthly transfer of $583.33 from your bank account to your IRA beginning in January and ending in December ($583.33 x 12 = $6,999.96).

2. Missing the contribution deadline

You have until your tax-filing deadline (typically April 15) to make any IRA contributions you want to count for the prior tax year. Waiting until the last minute to do so gives your contribution less time to generate returns, and it also makes it easier to miss the deadline.

Say you want to contribute $7,000 for 2025, but you wait until April 15, 2026, to complete it. Instead, you could break the $7,000 down into monthly installments (similar to above) or even make a single, lump-sum contribution early in the year. Approaches like these give your invested funds more time in the market while ensuring you don’t miss the deadline by accident.

3. Failure to follow IRA rollover rules

When leaving a job, rather than rolling your 401(k) over into another 401(k) with your new company, you decide to roll it over into an IRA. There are two ways this can be accomplished without having to pay income taxes or penalties:

1. Make a direct transfer: Ask your current plan provider to send the check directly to the new IRA plan provider.
2. Make an indirect rollover: With an indirect rollover, your current plan provider cuts you a check, and you’re responsible for depositing that check into the new IRA. You have 60 days to redeposit the entire amount to avoid taxes and penalties.

Rollover mistakes can be avoided by asking your current plan provider to send the money directly to the new account, or keeping a close eye on the calendar if you’d prefer to do it yourself.

4. Making ineligible early withdrawals

Any withdrawal from your traditional IRA before you reach age 59 1/2 is considered “early.” While exceptions exist (like experiencing a personal or family emergency, or having a child), most early withdrawals are subject to a 10% penalty, and you’ll immediately owe taxes on the money withdrawn.

Building an emergency savings account with enough money to cover three to six months’ worth of expenses is a good way to avoid having to make an early withdrawal.

5. Not being quite sure when to take required minimum distributions

Once you hit a specific age (depending on the year you were born), you must take a required minimum distribution (RMD) by Dec. 31 of each year. Failure to do so could result in a penalty of 25% on the amount you were required to take. For example, if you were required to withdraw $20,000, the penalty could be up to $5,000.

The most straightforward way to avoid penalties is to set up automatic withdrawals. You decide how often you want to withdraw funds and can adjust the automation as needed. For example, if the best way for you to budget is by withdrawing a portion of your total RMD each month, you can set it up that way. If a quarterly or annual withdrawal works best for you, those are also options.

The good news regarding IRA mistakes is how simple they are to avoid, once you know what to look out for. The goal is to retain every penny you’ve worked so hard for by never having to pay unnecessary penalties.

As spot bitcoin

exchange-traded funds continue to grow and Wall Street wades deeper into crypto, more and more people are able to gain exposure to digital assets through their individual retirement accounts (IRAs).

IRAs offer tax advantages and a range of investment options, including stocks, real estate, commodities and, increasingly, cryptocurrencies. But when it comes to crypto, there’s usually only one investment strategy available: to buy and hold.

It’s a strategy that might work well for assets like the S&P 500, which have long track records of steadily appreciating over longer time frames, but bitcoin is still an extremely volatile asset and other coins even more so.

The idea behind BlockTrust IRA, then, is simple: to manage the crypto positions of its customers in order to take advantage of that volatility and maximize their returns.

“We’re the only company that has an AI tool meshed with traders that put people automatically in cash [when need be]. Then we wait for the right signals, and we buy back in,” Jonathan Rose, the firm’s CEO, told CoinDesk in an interview.

“Where people are scared of volatility and scared of risk, we actually want the volatility and the risk associated with that, because that’s how we actually make our clients money,” Rose said. “We are right a lot more than we are wrong, and that’s how we’re able to beat the benchmark.”

BlockTrust’s secret sauce? Animus Technologies, a fund that provides intelligent asset management solutions for crypto. Animus has servers around the world and quantifies humongous amounts of data — to the point that a European government body has reached out to inquire what exactly they’re quantifying data for, according to Rose.

Animus typically only shares its signals with high net-worth individuals and fund clients, Rose said. In other words, crypto retail participants may now benefit, through their BlockTrust accounts, from the kind of trading mechanisms that previously were only available to quant funds.

The sophisticated strategies are currently only available for bitcoin

and ether , but BlockTrust offers exposure to 60 different cryptocurrencies, Rose said. Users of the platform can invest as little as $1,000 for non-managed accounts, or $25,000 if they want a managed account — and trading fees can go as low as 0.4% for the former and 0.14% for the latter.

BlockTrust IRA went live officially in February. In March, the firm had accrued $10 million in assets, and Rose expects it to bring in roughly $100 million before the end of the year.

The company’s early success may also be due to the fact that it’s not just open to U.S. residents, but to people all around the world, as long as they can pass its Know-Your-Customer (KYC) checks. Americans do have the added advantage of being able to use their tax-deferred retirement savings to gain exposure.

Crypto markets are ever changing, and trading strategies that function perfectly for a long time may suddenly become outdated due to shifts in the economic environment or crypto-intrinsic changes — potentially threatening to render Animus’ approach obsolete someday. But Rose isn’t concerned.

“When [the people at] Animus Technologies go to these hedge fund conferences and speak, they always come back with a big grin on their faces, because they’re like, ‘We are so light-years ahead of anyone remotely doing what we’re doing,’” Rose said. “It’s going to take like four to six years for people to even kind of catch up to us.”