Individual retirement account

An individual retirement account (IRA) is a personal savings plan which allows you to invest or set aside money for retirement, while offering you deferred tax / tax advantages.

IRA's can be individual plans offered by financial firms, or can also be offered by employers. The most common retirement account offered by employers is a 401k plan (named for the applicable IRS code section), whereby individuals can set aside either a set percentage or set amount each paycheck (limited to maximum amounts by the IRS) which is set aside and is not taxed at the outset, but later withdrawals are taxed. The employer commonly matches a portion of the amount, but is not required. Persons age 50 or older can, in some cases, set aside "catch up" contributions (again, limited to IRS maximums) which are not matched. The amounts can be invested either in company stock or in other types of investments such as mutual funds.

In the educational world, a 403b plan works generally the same way, with some minor differences.

The federal government version of a 401k is the Thrift Savings Plan.

See also

• IRA, Roth IRA, Social security
• Assets
• Stocks and Bonds
• Stock market
• Savings