YOU ASK:

What is the definition of Individual Retirement Account (IRA)?

WE ANSWER:

An Individual Retirement Account or IRA is a savings plan for self-employed people or for people who have earnings that fall under a certain level. The IRA is tax-deductible and allows an individual to set aside a certain amount of money where taxes are not charged until he begins to withdraw from the fund. Actually, those who have employer-endorsed retirement plans can still put aside money for IRA, but these will be made on a non-deductible bases (meaning tax will be deducted from these).

An IRA can be established using a mutual fund, a bank or a brokerage.

There are several kinds of IRA. There is the traditional IRA, where money is deposited where tax is deducted. There is the Roth IRA, where contributions are made with after-tax assets. There is also what they call the Simple IRA, the Self-Directed IRA and the SEP IRA.

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