What exactly is an IRA?
An IRA – which stands for Individual Retirement Account – is a tax-deferred account that you can use to save for your retirement. If you’re still employed, you can contribute up to the Internal Revenue Service’s IRA maximum for the year – $4,000 in 2007 (or $5,000 if you’re age 50 or older). If you aren’t employed, you cannot contribute to an IRA. However, if your spouse is working and you aren’t, your spouse can contribute on your behalf (subject to certain restrictions). IRA contributions can then be used to purchase a variety of investments including stocks, bonds, and CDs. There are several types of IRAs, but the most popular are the rollover IRA, Traditional IRA, and Roth IRA.
