An Individual Retirement Account (IRA) is a personal savings plan that offers tax benefits to help you save for retirement.
In Depth
An Individual Retirement Account (IRA) is a popular personal savings plan that provides tax advantages to encourage people to save for their retirement. There are different types of IRAs, such as Traditional and Roth, each with unique tax benefits. Contributions to a Traditional IRA may be tax-deductible, and earnings grow tax-deferred until withdrawal in retirement. Roth IRA contributions are made with after-tax money, but qualified withdrawals in retirement are tax-free. The specific rules and contribution limits are set by the IRS and can change over time.
Example
Sarah contributes to her Roth IRA each month, knowing that her qualified withdrawals in retirement will be tax-free.