Definition of individual retirement account
: ira
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Under this, employees are automatically enrolled in individual retirement accounts invested in mutual funds.
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By doing this, the couple allegedly deducted $268,257 more than they were entitled to invest in individual retirement accounts.
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Donors who are 70½ years old or above may consider donating funds directly from their individual retirement accounts to colleges, says Mr. Masterson.
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The new disclosure shows that in the last year Romney received $1.7 million in distributions from a Goldman Sachs individual retirement account.
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Video provided by TheStreet Newslook Financial planners are worried that Americans don’t know how to turn the assets in their 401(k) plans and individual retirement accounts (IRAs) into income when the time comes to retire.
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Some don’t offer individual retirement accounts or trust accounts.
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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.
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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).
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
1974
Financial Definition of INDIVIDUAL RETIREMENT ACCOUNT
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.
Source: Investing Answers
Law Dictionary
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