What are Individual Retirement Accounts?
An Individual Retirement Account is a personal investment account that American taxpayers use to set aside money for their retirement. The basic idea behind the creation of the IRA was to encourage people to save money for their retirement by offering tax advantages for planning ahead. People can invest money into an IRA—or multiple IRAs—which will accrue earnings, all of which can be used to fund your retirement years. The earlier you start contributing to an IRA, the more retirement income you will presumably have as a retiree. There are several different account options to choose from, but the most popular are the traditional IRAs and Roth IRAs. The two share some similar qualities, but there are different conditions and eligibility requirements for each—and most importantly—the tax implications vary greatly between them.
