A personal retirement savings account with tax advantages; types include Traditional and Roth.
An Individual Retirement Account (IRA) is a personal retirement savings account offering tax advantages. Two main types exist: Traditional IRAs (where contributions may be tax-deductible and withdrawals in retirement are taxed as income) and Roth IRAs (where contributions are made after-tax but qualified withdrawals are tax-free). IRAs are separate from employer plans and available to anyone with earned income. For 2024, contribution limits are $7,000 annually ($8,000 if age 50+). Traditional IRAs offer immediate tax deductions (useful for high earners), but Roth IRAs offer tax-free growth and withdrawals (better for younger people or expecting higher tax rates in retirement). IRAs are powerful wealth-building tools; maxing out an IRA early in your career can result in millions in retirement savings due to compound growth.