Individual Retirement Account

Also known as IRAs, individual retirement accounts give individuals the opportunity to set aside money each year for their retirement. If you meet certain income and other requirements, your IRA deposits become tax-deductible, reducing your taxable income dollar for dollar, and the earnings on your IRA investments grow tax-free. But the funds you withdraw at retirement are taxed. Recently the government established a new flavor of IRA, known as a Roth IRA, under which contributions aren't tax deductible, but earnings grow tax-free and withdrawals at retirement aren't taxed either. Either way, IRA contributions can be invested in a variety of vehicles, including stocks, bonds, certificates of deposit, and mutual funds. Most analysts consider some kind of IRA a good deal for investors.

 

 

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