The table below compares brokerage accounts with retirement accounts.
| Brokerage Account | Retirement Account | |
|---|---|---|
| Taxes | May incur capitals gains tax on investment income; investments sold 1 year or less after buying are subject to ordinary income tax | Typically no capital gains; tax-deferred or tax-free growth |
| Contributions | Unlimited | Caps on annual contributions |
| Withdrawals | No limits or penalties | Penalties for withdrawing before a certain age, unless exceptions are met |
| Primary Use | Stock trading, options trading, additional long-term investments after maxing out retirement accounts | Long-term growth, retirement savings |
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