Individual Retirement Account (IRA)

“A personal savings plan that provides tax advantages to save and invest for retirement. Depending upon individual circumstances such as participation in employee-sponsored plans such as a 401(k) plan, contributions can be tax-deductible. Until the earnings are withdrawn, a traditional IRA will not be taxed. In a Roth IRA, withdrawals are tax-free as long as the requirements are met. Tax penalties may be incurred for funds withdrawn before age 59 1/2. An individual’s IRA contributions cannot exceed $3000 (as of tax year 2004).

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