Individual Retirement Arrangement

Individual Retirement Arrangement

Description and Definition of Individual Retirement Arrangement (IRA)

A retirement account to which $2,000 or 100% of the compensation you earned during the year, whichever is less, may be contributed annually. Deductions for the contribution are restricted if you are covered by a company retirement plan or if your income is above a certain level. Earnings accumulate tax free on IRA contributions. In most cases there is a penalty for withdrawing funds before you reach age 59-1/2.

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