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, or IRAs, hold more assets than any other type of retirement vehicle.
Like most traditional banks, Self-Help offers its customers savings and money market accounts as well as certificates of deposit (CDs) and individual retirement accounts (IRAs)--all federally insured and offering market rates of return or better.
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It means allowing workers to open individual retirement accounts under established government guidelines.
The new law includes several significant pension reform benefits for association executives that ASAE has supported, such as an increase in the limits that an association executive may defer tax-free to 401(k) plans, 403(b) plans, 457 plans, and individual retirement accounts.
On the latter point, the NBER reports that Individual Retirement Accounts and 401(k)s have boosted national savings, rather than displacing other forms of savings.
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Most significant, beginning in 1997, the Act creates a three-year window during which individuals with large accumulations in qualified plans and individual retirement accounts (IRAs) may receive distributions without having to pay the 15-percent excise tax on "excess distributions."
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* Make gifts to the next generation to encourage building individual retirement accounts. Children and grandchildren with earned income can contribute up to $2,000 ($2,250 with a non-working spouse) annually to tax-deferred IRAs.
For example, tax policy experts in 1981 misjudged the popularity of newly established individual retirement accounts, and their models greatly underestimated the subsequent revenue loss to the government.
Brochure titles include: Retirement planning, Interest Expense Deductions, 401(k) Plans, Travel and Entertainment Expenses, Estate Planning, Individual Retirement Accounts and Real Estate Ownership as well as eight other topics which may be of interest to small business clients and prospective-clients.

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