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 ?
At the same time he said, traditional pensions have been on the decline in the United States and more people have coverage through 401(k) plans and individual retirement accounts than through traditional pensions.
There are advantages to both kinds of individual retirement accounts, but a Roth IRA may be the smarter move.
While the Taxpayer Relief Act of 1997 created or extended many higher education incentives, such as Education individual retirement accounts, qualified state tuition programs, U.S.
Both the administration and the Senate Republican proposals include a child tax credit, tax cuts for education and training, expanded tax relief for individual retirement accounts and a reduction in capital gains taxes.
Younger workers, however, could invest some of their payroll taxes into higher-risk, potentially higher-yield, Individual Retirement Accounts. Proponents of this approach assume that payroll taxes from the work force will perpetually support current retirees.
Such deductions would be similar to deductions permitted for individual retirement accounts and 401(k) contributions.
Notice 98-50 explains whether and how taxpayers can reconvert amounts that have been transferred back and forth between regular and Roth individual retirement accounts (IRAs).
SIMPLE plans were created under the Small Business Job Protection Act of 1996 so smaller employers could make contributions to individual retirement accounts or annuities established for employees.
Like Alston, millions of Americans seek ways to stash money in tax-deferred vehicles such as 401(k)s, individual retirement accounts (IRAs) and annuities, or tax-free instruments, such as muni bonds and Treasury securities.
The Taxpayer Relief Act of 1997 (TRA '97) made significant changes to the rules governing individual retirement accounts (IRAs).
For employees of small employers (that is, those who employed an average of 50 employees or fewer in either of the two preceding years) or self-employed individuals with high-deductible health plans (those with $1,500-$2,250 deductibles for individual coverage or $3,000-$4,500 deductibles for family coverage), tax-favored medical savings accounts similar to individual retirement accounts may be set up to fund health benefits and medical care expenses.

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