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individual retirement account

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

Individual Retirement Account

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individuals to contribute pretax earnings up to a maximum yearly allowance and to defer income taxes until the money is withdrawn after retirement.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 Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.