What is an IRA?
IRA or Individual Retirement Account is a savings account with big tax deferral making it an ideal way to sock away cash for your retirement. The investor can hold stocks, bonds, mutual funds and other assets.
Unlike 401(k)s, accounts provided by your employer, the most common types of IRAs are accounts that you are responsible to open on your own. Self-employed individuals and small business owners can open an IRA. There are several different types of IRAs, including traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs.
There are eligibility restrictions for opening an IRA based on your income or employment status. Also, there are limits on how much you can contribute each year and there are penalties in most cases for taking out money before the designated retirement age.