Series 22: 1.2.3.2. Individual Retirement Accounts

1.2.3.2.  Individual Retirement Accounts

IRAs are retirement plans that were introduced in the U.S. to allow individuals to contribute to a retirement account with pre-tax dollars. In other words, individuals are permitted to deduct a certain amount of money from their taxable income if they put it into an IRA. Taxes on the contributions and earnings in the account are deferred until the time of withdrawal. At withdrawal, all contributions and earnings are taxed at the individual’s ordinary tax rate. The investment advantage of an IRA is that income that normally would be taken out in taxes can stay in the account and earn additional income.

IRC Section 408