individual retirement account
Recent Examples of individual retirement account from the Web
There was a move toward democratizing stock ownership in the 1980s and 1990s, with the advent of individual retirement accounts, but the busts of 2001 and 2007 scared off some middle-class investors.
That’s not to be confused with all the retirement savings accounts, from 401(k) plans at work to various types of individual retirement accounts (IRAs) to self-employment plans (SEP).
The annual savings limit on IRAs, or individual retirement accounts, will also remain unchanged at $5,500 for next year, with savers 50 and older able to save an additional $1,000.
People who withdraw money from certain retirement accounts like 401(k)’s or individual retirement accounts before age 59½, the report noted, typically have to pay income taxes on the money as well as a 10 percent tax penalty.
Instead, workers were left with the responsibility of saving for retirement themselves, with individual retirement accounts or 401(k)s.
The plan the state created, OregonSaves, automatically enrolls those employees in individual retirement accounts and deducts contributions from their paychecks.
IRAs, or individual retirement accounts, offer another way to save.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'individual retirement account.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use of individual retirement account
Financial Definition of INDIVIDUAL RETIREMENT ACCOUNT
What It Is
An Individual Retirement Account (IRA) is a government sponsored, tax-deferred personal retirement plan.
How It Works
An IRA can also be referred to as a Traditional IRA.
In order to open an IRA, an individual must first establish an account with a bank, brokerage firm or mutual fund company. These firms then act in the capacity of a fiduciary. The individual is responsible for establishing the IRA and selecting the plan investments. Once the account has been established, the individual can contribute a maximum of several thousand dollars per year into an IRA. The IRA plan, which was established in 1974 by Congress, has been an extremely popular retirement savings plan for workers for over thirty years.
Taxes on Traditional IRA contributions and earnings are deferred until the account owner takes a distribution from the IRA. When money is withdrawn from a Traditional IRA it is taxed as regular income. Withdrawals are typically made when or after the plan owner has reached the age of 59 1/2. If the plan owner withdraws money from the account prior to retirement age, then he/she will incur a 10% penalty payable to the IRS (unless specific circumstances apply).
Why It Matters
An IRA is among several options Americans have when planning for retirement. The best option differs from one individual to another, so it is important for those planning for retirement to consider all of their options. To view an article going more in depth on IRAs as well as shedding light on a similar plan, a Roth IRA, click here.
Seen and Heard
What made you want to look up individual retirement account? Please tell us where you read or heard it (including the quote, if possible).