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IRA |
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See Individual Retirement Account.
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 (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.) Individual Retirement Account (IRA) What Does Individual Retirement Account (IRA) Mean? An investing tool used by individuals to save for retirement. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs, and SEP IRAs. Traditional and Roth IRAs are established by individuals, who are allowed to contribute 100% of compensation (selfemployment income for sole proprietors and partners) up to a set maximum dollar amount. Contributions to the Traditional IRA may be tax-deductible, depending on the taxpayer's income, tax filing status, and coverage by an employer-sponsored retirement plan. Roth IRA contributions are not tax-deductible. SEPs and SIMPLEs are retirement plans established by employers. Individual participant contributions are made to SEP IRAs and SIMPLE IRAs. Also referred to as individual retirement arrangements. Investopedia explains Individual Retirement Account (IRA) With the exception of Roth IRAs, in which eligible distributions are tax-free, all IRA withdrawals are taxed as income. Because income is likely to be lower during retirement, the tax rate may be lower at that time. In addition to the potential tax savings from deductible contributions and nontaxable growth, IRAs can be very valuable tax management tools for individuals, and depending on income, an individual may be able to fit into a lower tax bracket with tax-deductible contributions during his or her working years and still enjoy a low tax bracket during retirement. Related Terms: Individual Retirement Arrangement (IRA) An individual retirement arrangement is a trust set up to receive retirement contributions of individuals. The arrangement may be in the form of an individual retirement account or individual retirement annuity. The amount that may be contributed is limited. Amounts earned in the IRA are not taxed until they are withdrawn. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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attack came the same day Irish Republican Army dissidents left a 400-pound (180-kilogram) car bomb outside police headquarters in Belfast. For the member (Volunteer) in the Irish Republican Army, see and List of members of the Irish Republican Army. is generally considered to cover the events leading up to the 1994 Provisional Irish Republican Army (PIRA) ceasefire, the end of most of the violence of the Troubles, the Belfast (or Good Friday) Agreement, and |
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