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Individual Retirement Accounts (IRAs) were created by Congress in 1974 to benefit individuals that were not covered by an employment-based retirement plan such as a pension. An IRA is an investment mechanism for tax-deferred retirement saving that is under the control of individuals, not employers. Individual Retirement Accounts generally take two forms:
- Traditional IRA - an individual retirement account that accepts tax deductible contributions. Distributions from the account are taxable when withdrawn.
- Roth IRA - an individual retirement account to which nondeductible contributions are made, but withdrawals are tax-exempt.
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