What is an IRA?

by fred.nader , in category: Banking and Credit , 10 months ago

What is an IRA?

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1 answer

by cedrick.casper , 10 months ago


An Individual Retirement Account (IRA) is a type of retirement savings account available in the United States that provides tax advantages for individuals to save money for retirement. IRAs are established by individuals, and contributions are made on a regular basis, either annually or throughout the year. There are two main types of IRAs, Traditional IRA and Roth IRA, each with its own set of rules and benefits. Traditional IRA contributions are typically tax-deductible, and earnings grow tax-deferred until withdrawn during retirement, at which point they are subject to taxation. On the other hand, Roth IRA contributions are not tax-deductible, but qualified withdrawals (after reaching a certain age and meeting other criteria) are tax-free. IRAs are subject to annual contribution limits set by the government.