What is an IRA?
IRA is an acronym for Individual Retirement Account. There are different forms of IRAs designed to benefit individual needs, but the goal of an IRA is to provide you with financial stability throughout your later life. However, there are strict tax regulations regarding the transfer of an IRA to an heir. For this reason, it is important to discuss your IRA arrangements with your estate attorney before making any concrete decisions.
An IRA, also called an individual retirement annuity or account, is a vehicle for accumulating money for retirement. The interest earned on money placed in an IRA grows tax-deferred, meaning you do not pay any taxes on the funds until you withdraw them. Since these funds are most typically withdrawn at retirement when you are in a lower tax bracket, the taxes you’ll pay will probably be less. Because IRAs are intended for retirement, you may have to pay tax penalties if you withdraw the money before age 59 1/2 (except in special circumstances). Be sure to check with your tax adviser before withdrawing funds from your IRA.
