Individual Retirement Account


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Related to Individual Retirement Account: Roth Individual Retirement Account

Individual Retirement Account (IRA)

A retirement account that may be established by an employed person. IRA contributions are tax deductible according to certain guidelines, and the gains in the account are tax-deferred.

Individual Retirement Account (IRA) rollover

A provision of the law governing IRA's that enables a retiree or anyone receiving a lump-sum payment from a pension, profit-sharing, or salary reduction plan to transfer the amount into an IRA.

Individual Retirement Account

An account into which a worker makes contributions up to a certain limit throughout his/her working life, and from which he/she begins to take distributions following retirement. There are two types of IRA. A traditional IRA allows for tax deductible contributions and taxable distributions, while a Roth IRA has non-deductible contributions and tax-free distributions. The limit to annual contributions to an IRA varies each year and is indexed to inflation. IRAs are invested in securities and usually own common stock and certificates of deposit. See also: 401(k).

individual retirement account

See IRA.

Individual retirement account (IRA).

Individual retirement accounts are one of two types of individual retirement arrangements (IRAs) that provide tax advantages as you save for retirement. The other is an individual retirement annuity.

Both have the same annual contribution limits, catch-up provisions if you're 50 or older, and withdrawal requirements. In addition, both are available in three varieties: traditional deductible, traditional nondeductible, and Roth.

The primary difference between the two is in the investments you make with your contributions.

You open an individual retirement account with a financial services firm, such as a bank, brokerage firm, or investment company, as custodian. The accounts are self-directed, which means you can choose among the investments available through your custodian.

In common practice, however, perhaps because more people have individual retirement accounts, the acronym IRA tends to be used to refer to an account rather than annuity or arrangement.

individual retirement account (IRA)

A retirement savings program entitling the individual to deduct contributions from gross income for purposes of calculating income taxes.The contributions are said to be from before-tax dollars.

Generally speaking, first-time home buyers can withdraw up to $10,000 from their IRA or Roth-IRA accounts,penalty free,in order to pay qualified home purchase expenses such as a down payment. Spouses can withdraw up to $20,000.There's a lifetime limit,though.Once you use up your distribution “free passes,”you can't put the money back in your account and then use it again in the future. (For more information, see Tax Topic 428,“Roth IRA Distributions,” and Publication 590,“Individual Retirement Accounts,”available at the IRS Web site, www.irs.gov.)

References in periodicals archive ?
Individual Retirement Accounts (IRAs) remain an important part of your overall savings plan, in which earnings grow tax-deferred until withdrawn (see "Resurrecting IRAs," Personal Finance, July 1991).
Investors who reveled in this year's bull market have a few more things to cheer about: A cut in the capital gains tax rate, changes in laws on individual retirement accounts to allow more people to claim a tax deduction, and the Roth IRA.
ShareBuilder Securities Corporation is encouraging anyone who has yet to fund an Individual Retirement Account (IRA or ROTH IRA) for the 2005 tax season to do so with seven free Automatic Investment trades when you open an IRA by April 17(a).
For instance, the expanded flexibility for IRA tax deductions is beneficial, but lower-income families often don't have money to spare to fund an Individual Retirement Account, he said.
Place additional funds in an Individual Retirement Account.
If an investor really believes that Magellan is a must-have investment, he or she can open an Individual Retirement Account for as little as $500, or a regular account for a minimum of $2,500.
A SIMPLE plan may be set up either as an individual retirement account (IRA) for each employee or as part of a qualified cash or deferred arrangement (under Internal Revenue Code section 401(k)).
Many choose to roll over the distribution to another qualified retirement plan or to an individual retirement account (IRA).
The law allows employers with 100 or fewer employees to establish a savings incentive matching plan for employees (SIMPLE) that can be in the form of an individual retirement account for each employee or part of a 401 (k) plan.
By the time you're 40, you should already be making regular contributions to an individual retirement account.
The limitation for contributions to an individual retirement account (IRA) is generally equal to the lesser of $2,000 or 100% of compensation includible in gross income.
What we're really talking about is taking some small part of Social Security and allowing people to invest it'' in an account similar to an Individual Retirement Account or 401(k).

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