GlossaryAccounts
Financial term

IRA (Individual Retirement Account)

A personal, tax-advantaged retirement account you open yourself, in traditional (pre-tax) or Roth (after-tax) form.

An IRA is a retirement account you open independently of an employer. It comes in two main flavors. A traditional IRA may give you a tax deduction now (subject to income and workplace-plan rules), grows tax-deferred, and is taxed on withdrawal. A Roth IRA takes after-tax dollars and provides tax-free qualified withdrawals, with no required minimum distributions during your lifetime.

Annual contribution limits are lower than a 401(k)'s, with a catch-up for those 50 and older. Roth IRAs have income limits on direct contributions, which is why higher earners sometimes use a backdoor Roth. IRAs are also the destination for rolling over old 401(k) balances.

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This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.

More in Accounts
401(k)Roth IRATraditional IRAHSA (Health Savings Account)529 PlanBackdoor Roth IRA
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