An "IRA" is an "Individual Retirement Account". IRA account provide tax advantages when people invest in these funds, because someone saving in an IRA doesn't have to pay taxes until the money is withdrawn. This makes the IRA an ideal account for those saving for retirement. IRAs are sometimes referred to as an "Individual Retirement Arrangement".

 

Traditional IRA - These can also be known as "deductible IRA" and a "non-deductible" IRA, depending on the nature of funds you placed in this IRA. Typically, a traditional IRA user places tax-deductible money into the plan and both this transaction and whatever earnings you receive from the IRA are not taxed until you withdraw them. When this happens, the withdrawn funds are taxed as income.

Tax benefits	Tax-deferred growth, tax-deductible contributions1
Account fees2	None
Eligibility (age)3	Less than 70½
Eligibility (income)	Must have employment compensation
IRA maximum contribution	$5,000 annually ($6,000 if 50 or older)
Minimum to open	Depend on which you use, usually $500
Withdrawals	Minimum required distributions starting at age 70½