Individual Retirement Accounts (IRAs)
Individual Retirement Accounts (IRA) are tax-advantaged investment accounts that individual investors can open to help save for retirement. You, the investor, can choose a vendor and the vendor provides a choice of investment options, typically various mutual funds.
Common types of IRAs are:
- Traditional IRA. Contributions typically are tax-deductible. You pay no taxes on IRA earnings until retirement, when withdrawals are taxed as income.
- Roth IRA. Contributions are not tax-deductible but are made with after-tax dollars. Income earned on the account, from interest, dividends or capital gains, and withdrawals are generally tax-free.
- SEP (Simplified Employee Pension) IRA. Allows an employer, typically a small business or self-employed individual, to make retirement plan contributions into a traditional IRA established in the employee's name.
- SIMPLE (Savings Incentive Match Plan for Employees) IRA. Available to small businesses that do not have any other retirement savings plan. The SIMPLE IRA allows employer and employee contributions, similar to a 401(k) plan, but with simpler, less costly administration, and lower contribution limits.
The SEC does not regulate or oversee IRAs. You can find general tax information about these plans on the Internal Revenue Service’s (IRS) website (IRS IRA webpage).
Additional Information
