IRAs are Individual Retirement Accounts.
When Social Security and pension plans are not enough to maintain your standard of living at retirement, an Individual Retirement Account (IRA) can be an excellent investment. Both the Roth and traditional IRA offer a number of benefits, depending on your current financial situation.
- Traditional IRAs allow you to defer taxes on your contributions' earnings until they are withdrawn.
- Roth IRAs allow only nondeductible contributions and features tax-free withdrawals for certain distribution reasons after a five-year holding period.
- Coverdell Education Savings Accounts (CESA) are non deductible accounts that feature tax-free withdrawals for a child's education expenses.