Quick Definition

An Individual Retirement Account (IRA) is a tax-advantaged investment tool designed to help individuals save for retirement.

Examples

• 1A 30-year-old starts contributing $3,000 annually to a traditional IRA, potentially reducing their taxable income each year.
• 2An individual rolls over a 401(k) from a previous employer into an IRA to maintain control over the investment choices.
• 3A retiree begins withdrawing funds from their IRA at age 65, adhering to IRS rules to avoid penalties.
• 4A self-employed person opens a SEP IRA to maximize their retirement savings and take advantage of higher contribution limits.

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