Individual Retirement Account

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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 ?
Publication 590, Individual Retirement Arrangements (IRAs), Internal Revenue Service, Department of Treasury, for more information on eligibility requirements and limitations.
Taxpayers with Individual Retirement Arrangement (IRA) Plans, by Type of Plan, Tax Year 2004 [All figures are estimates based n thousands of dollars] on samples--money amounts are in thousands of dollars] Total contributions [1] Type of plan Number Amount (1) (2) Total 14,706,060 48,728,654 Traditional IRA plans 5,305,442 12,632,543 SEP plans 1,571,637 13,757,176 SIMPLE plans 1,935,896 7,621,057 Roth IRA plans 6,657,635 14,717,878 Contributions deducted on Form 1040 Type of plan Number Amount (3) (4) Total 5,587,535 20,245,616 Traditional IRA plans 4,011,681 10,028,607 SEP plans 920,770 7,923,068 SIMPLE plans 733,163 2,293,941 Roth IRA plans n.
6 trillion in individual retirement arrangements (IRA's) based on the yearend 2000 fair market value of their plans.
IRD includes any account balances in the decedent's qualified pension and profit-sharing plans and individual retirement arrangements (IRAS),[4] as well as a lump-sum distribution from a decedent's IRA that consists of both deductible and nondeductible contributions.
However, there is another exception that can be found in IRS publication 590, Individual Retirement Arrangements.
This is another name for the original (regular) individual retirement arrangement that was first made available in 1974 under the Employee Retirement Income Security Act (ERISA).

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