IRA (Individual Retirement Account)
A retirement savings account with tax benefits. Traditional IRA: tax-deductible now, taxed later. Roth IRA: taxed now, tax-free later.
Full explanation
An IRA is a personal retirement account with tax advantages. Traditional IRA: contributions may be tax-deductible (reducing current-year taxes), investments grow tax-deferred, and withdrawals in retirement are taxed as ordinary income. Roth IRA: contributions are made with after-tax dollars (no deduction now), but qualified withdrawals in retirement are completely tax-free. For 2026: contribution limit is $7,000 ($8,000 if age 50+). Roth IRA income limits: ability to contribute phases out at $150K-$165K single, $236K-$246K married filing jointly.
Source: IRS Publication 590-A and 590-B
Ask the AI about this
“How does iraaffect my taxes?”Tax education only. Source: IRS Publication 590-A and 590-B.