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individual retirement account

a savings plan that offers tax advantages to an individual depositor to set aside money for retirement.
Abbreviation: IRA.
Compare Keogh plan. Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2018.
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individual retirement account in Culture
Individual Retirement Account (IRA)

A retirement plan. The “traditional” IRA allows individuals to contribute pretax earnings up to a maximum yearly allowance and to defer income taxes until the money is withdrawn after retirement. The “Roth” IRA allows individuals to contribute aftertax earnings and pay no taxes on future withdrawals. In contrast to a 401(k) plan, an IRA is funded entirely by the individual tax payer.

The New Dictionary of Cultural Literacy, Third Edition
Copyright © 2005 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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