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{{US|reason=irrelevant}}
An '''individual retirement arrangement''', or '''IRA''', is a personal savings plan which allows you to set aside money for retirement, while offering you tax advantages. You may be able to deduct some or all of your contributions to your IRA. Amounts in your IRA, including earnings, generally are not taxed until distributed to you. IRA's cannot be owned jointly. However, any amounts remaining in your IRA upon your death can be paid to your beneficiary or beneficiaries.

You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. You can also open an IRA through your stockbroker. Any IRA must meet Internal Revenue Code requirements.<ref>{{Cite web|format=pdf|url=https://www.irs.gov/pub/irs-pdf/p590a.pdf |title=IRS Pub 590-A Contributions to Individual Retirement Arrangements (IRAs)| publisher=IRS| accessdate= 12 March 2020| page=6}}</ref>

ICI (Investment Company Institute) reports that at year end 2018, Traditional IRA's held an estimated $8.806 trillion of investor's wealth accounting for 85% of total IRA assets,<ref>2019 ICI Mutual Fund Fact Book:The U.S. Retirement Market </ref><ref group="note"> Traditional IRA assets 1997 -  2018 (in billions). Source: Investment Company Institute Factbooks.

{| class="wikitable collapsible collapsed"
|-
! Year !!Assets !!Share 
|-
| 1997||$1,642||95%
|-
| 1998|||$1,974||92%
|-
| 1999||$2,423||91%
|-
| 2000||$2,407||92%
|-
| 2001||$2,395||91%
|-
| 2002||$2,322||92%
|-
| 2003||$2,719ᵉ||91%
|-
| 2004||$2,957||90%
|-
| 2005||$3,034||89%
|-
| 2006||$3,722||88%
|-
| 2007||$4,187||89%
|-
| 2008||$3,257||88%
|-
| 2009||$3,941||88%
|-
| 2010||$4,430||86%
|-
| 2011||$4,459||87%
|-
| 2012||$4,969||85%
|-
| 2013||$5,828||85%
|-
| 2014||$6,225||85%
|-
| 2015||$6,251ᵉ||85%
|-
| 2016||$6,695ᵉ||85%
|-
| 2017||$7,850ᵉ||85%
|-
| 2018||$7,496ᵉ||85%
|}
* Share is the percentage of total IRA assets.
* Traditional IRAs include contributory and rollover IRAs.  
*ᵉ Data are estimated.<br>
Sources: Investment Company Institute, Internal Revenue Service Statistics of Income Division, and Government Accountability Office</ref> 

__TOC__
==Types of IRAs==

The [[Traditional IRA]] was created in 1974 with the passage of the Employee Retirement Income Security Act (ERISA)<ref group="note">See {{cite web |url=https://www.ici.org/pdf/per11-01.pdf |title=The Individual Retirement Account at Age 30: A Retrospective |last= |first= |website= |publisher=Investment Company Institute |date=February 2005| | series =Perspective, V11, N1| access-date=14-March-2017 |quote=}} for a history of the Traditional IRA to 2003.</ref> Over the years, the Traditional IRA has been expanded to include a growing number of specialized plan types. These include:

<center>
{| class="wikitable"
! style="background:#f0f0f0;" style="width: 200px;"|'''Type of IRA'''
! style="background:#f0f0f0;" style="width: 600px;"|'''Description'''
|-
|[[Traditional IRA]] || Original type of IRA. Allows tax-deductible contributions, subject to income limitations, and offers tax-deferred growth. Withdrawals are taxable, except for return of basis, which is "pro-rata."
|-
|[[Roth IRA]] || Contributions are after-tax but all future growth and withdrawals are tax-free. Contributions are subject to income limits. Shares a contribution limit with the Traditional IRA.
|-
|[[SEP|SEP (Simplified Employee Pension) IRAs]] || Retirement plan for self-employed individuals with no employees, and a simpler alternative to the [[Solo 401(k) plan|Solo 401(k)]]. Contributions are tax-deductible, growth is tax-deferred, and withdrawals are taxable. Contribution limit is independent from Traditional and Roth IRAs.
|-
|[[SIMPLE IRA|SIMPLE IRAs]] || Retirement plan for small businesses with employees, and a simpler alternative to the [[401(k)]]. Its use excludes the use of any other employer retirement plan, including the SEP-IRA. Employer matching is permitted. Contributions are tax-deductible, growth is tax-deferred, and withdrawals are taxable. Contribution limit is independent from Traditional and Roth IRAs.
|-
|[[Coverdell Education Savings Accounts (ESAs)]] || IRA-based account for education. Contributions are after-tax, growth is tax-deferred, and withdrawals for higher education are tax-free. Contribution limit is independent form other IRAs.
|}
</center>

See [[Roth versus Traditional]] for more guidance on how to choose between pre-tax and Roth contributions.

===Other IRA terminology===

In addition, various terms are used to describe specific types of IRAs that fit into the above categories, but have special rules and specific legal implications. These terms include:

<center>
{| class="wikitable"
! style="background:#f0f0f0;" style="width: 200px;"|'''Type of IRA'''
! style="background:#f0f0f0;" style="width: 600px;"|'''Description'''
|-
|[[Inheriting an IRA|Inherited IRA]] || Inherited IRAs can be either Traditional or Roth, and Traditional IRAs inherit the basis of the original IRA. Inherited IRAs work like normal IRAs, but cannot be commingled with or rolled into other IRAs, cannot receive contributions from the new owner, and Traditional Inherited IRAs cannot be converted to a Roth IRA. Inherited IRAs have special distribution requirements; see: [[Required Minimum Distribution|Required Minimum Distribution]].
|-
|[[Stretch IRA]] || IRAs inherited prior to January 1, 2020 can be kept (and "stretched" out) over the heir's life expectancy, providing long-term tax-deferred or tax-free growth. [[Required_Minimum_Distribution|RMDs]] are required every year regardless of the heir's age, although they should be smaller than the rate of return of reasonable investments until the heir is well into their 70's, so the balance could continue to grow for decades. Following the passage of the SECURE Act, IRAs inherited after January 1, 2020 (with several exceptions<ref>[https://www.kitces.com/blog/secure-act-stretch-ira-401k-elimination-eligible-designated-beneficiary-retirement-accounts-taxes/ The (Partial) Death Of The Stretch IRA: How The SECURE Act Impacts Inherited Retirement Accounts], Michael Kitces, February 12, 2020.</ref>) have no RMDs, although must be emptied by the end of the tenth year after being inherited. It remains to be seen whether these will be commonly referred to "Stretch IRAs" too.
|-
|[[IRA_rollovers_and_transfers|Rollover]] IRA || A Rollover IRA is created when the account holder rolls over funds from a [[Qualified retirement plan|qualified retirement plan]] into an IRA, and they can be either Traditional or Roth. While Rollover IRAs generally work like normal IRAs, some [[Employer_retirement_plans_overview|employer plans]] limit incoming rollovers to Rollover IRAs and exclude Contributory IRAs, so contributing to a Rollover IRA could preclude a future rollover into these plans. Can also have legal consequences related to [[Asset protection|asset protection]].
|-
|Contributory IRA || A Contributory IRA is an IRA into which the account holder has directly contributed. Some [[Employer_retirement_plans_overview|employer plans]] prohibit incoming rollovers from Contributory IRAs. Can also have legal consequences related to [[Asset protection|asset protection]].
|-
|Spousal IRA || Non-working married spouses are generally allowed to contribute to their own IRAs using money earned by their spouse, subject to income limitations. Otherwise, spousal IRAs work exactly the same as a regular IRA. Can be either Traditional or Roth.
|-
|[[Non-deductible_traditional_IRA|Non-deductible IRA]] || A "Non-deductible Traditional IRA" or "Non-deductible IRA" is a Traditional IRA to which after-tax contributions have been made. Inherited, Contributory, and Spousal Traditional IRAs can all be non-deductible. The [[Traditional IRA]] page discusses the mechanics of basis tracking and withdrawals, and the [[Non-deductible_traditional_IRA|main page]] discusses suitability and performance of non-deductible IRAs.
|-
|Self-Directed IRA or "Checkbook" IRA || Self-Directed IRAs can be either Traditional or Roth, and allow for a much wider range of investments than would normally be permitted in an IRA; see [[IRA#Allowable_investments|below]]. 
|}
</center>

==Allowable investments==

IRAs available with most custodians allow a wide range of publicly-available investments, such as: [[Stock|stocks]], [[Bond|bonds]], [[Mutual fund|mutual funds]], savings accounts, [[Money markets|money market accounts]], [[Certificate of deposit|Certificates of Deposit (CDs)]], [[Treasury Inflation Protected Securities|Treasury Inflation-Protected Securities (TIPS)]], and [[Real estate investment trust|Real Estate Investment Trusts (REITs)]]. Annuities are allowed to be purchased inside an IRA as well, though this is typically done with an immediate annuity such as a [[Immediate fixed annuity|Single Premium Immediate Annuity (SPIA)]] in the distribution phase. The tax benefits of a [[Variable annuity|Variable Annuity]] would be wasted inside an IRA because they would be redundant.

Some IRA custodians offer "Self-directed" or "Checkbook" IRAs that allow an even wider range of investments, including: IPO stock, privately-owned businesses, loans (mortgages, hard money loans, etc.), domestic or foreign real estate (including undeveloped land), private real estate funds or syndications, certain derivatives (including stock options), foreign currencies, tax liens, and others. These IRAs usually have additional fees to cover the higher management costs for these investments. 

===Prohibited investments and transactions===

Regardless of whether an IRA is self-directed, the following types of investments and transactions are prohibited:

* Collectibles (artwork, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages, etc.), ''except'' for:
** 1 oz, ½ oz, ¼ oz, or 1/10 oz US gold coins
** 1 oz silver coins minted by the US Treasury Department
** Certain platinum coins
** Certain gold, silver, platinum, and palladium bullion
* Life insurance contracts
* Certain types of derivatives
* Self-dealing transactions involving yourself, your family, or your beneficiary, including:
** Loans to yourself or other disqualified persons
** Personally using property purchased with IRA funds, including real estate
** Acting as a property manager or performing maintenance on an IRA-owned rental property

==Required Minimum Distributions==
{{main|Required Minimum Distribution}}

Traditional, SEP, and SIMPLE IRAs have Required Minimum Distributions that generally begin the year the account holder reaches age 72. See the [[Required Minimum Distribution|main page]] for a discussion of the details. 

Inherited IRAs (Traditional and Roth) inherited prior to January 1, 2020 have Required Minimum Distributions calculated by [http://www.irs.gov/pub/irs-pdf/p590b.pdf IRS Publication 590-B Distribution Table I]. Inherited IRAs (Traditional and Roth) inherited ''after'' January 1, 2020 have no RMDs, but must be emptied by the end of the tenth year after being inherited, unless certain exceptions apply. 

Roth IRAs have no RMDs.

==Comparison to employer accounts==

[[Traditional IRA|Traditional]] and [[Roth IRA|Roth IRAs]] have many similarities with [[Employer retirement plans overview|employer retirement plans]]: contributions are either pre-tax (traditional) or Roth, growth is tax-deferred or tax-free, withdrawals before age 59½ are penalized unless exceptions apply, and are subject to RMDs (except the Roth IRA). However, IRAs are individually-controlled accounts, and employer plans are governed by the plan rules set by the employer and the provider, and they can have important differences. Many investors will face a choice between investing in an IRA and an employer plan, such as when not contributing enough to reach the limit in both accounts, and/or when separating from an employer and deciding whether to leave investments in the existing plan or roll it into an IRA. The following table lists the differences between IRAs, 401(k)'s, and 403(b)'s (the most common employer retirement account) that should help investors choose the best account given their own personal situation. This comparison is mostly independent of the choice between [[Traditional versus Roth]] tax structures, which is a complex topic discussed on its own wiki page. Other employer plans, such as the [[457(b)]], have important differences, and those differences are discussed on their respective plan pages. 

{| style="border-collapse: collapse; margin:auto;"  border="1" width=1100px
| align="center" style="background:#f0f0f0;" colspan="4"|'''Comparison Between IRAs and Common Employer Plans'''
|- align="center"
| ||'''IRA'''||'''[[401(k)]] ''(and [[403(b)]]'') Employer Plans'''||'''Advantage'''
|-
| '''Contribution Limits'''||$6,000 ($7,000 for age >=50) combined for all Traditional IRAs and [[Roth IRA|Roth IRAs]]. Spousal contributions permitted.||$19,500 ($26,000 for age >=50) elective deferral for all employer retirement accounts. $58,000 ($64,500 including catch-up) total employee and employer contributions into each unrelated employer plan. No spousal contributions permitted. Some plans may offer [[After-tax 401(k)|after-tax]] contribution options as well. ''(403(b)'s may offer an additional catch-up contribution of up to $3,000 and with a lifetime maximum of $15,000, for employees with at least 15 years of service and who have averaged less than $5,000 annual contributions. 403(b) contributions are independent from limits to a [[457(b)]].)''||While employer plans have higher contribution limits, this is not a good reason to ''not'' invest money first into an IRA, and/or roll over money from an employer plan into an IRA, if it were otherwise the preferred account. 
|-
| '''Income Limits'''||Deducting Traditional IRA contributions has a low [[Traditional_IRA#Contribution_and_income_limits|income limit]] when one is covered by a retirement plan at work. The limit is higher for spouses not covered, and there is no limit if the single filer or both MFJ filers are not covered. Roth IRA contributions have a [[Roth_IRA#Contribution_eligibility_and_limits|higher limit]], and this limit can be circumvented by the [[Backdoor Roth|Backdoor Roth IRA process]].||Generally no income limits for 401(k) and 403(b) contributions, although there is a limit on the compensation that can be used for matching calculations ($290,000 as of 2021<ref>[https://www.irs.gov/retirement-plans/401k-plans-deferrals-and-matching-when-compensation-exceeds-the-annual-limit 401-k plans deferrals and matching when compensation exceeds the annual limit], IRS</ref>)||Employer plan
|-
| '''Available Tax Structures'''||Traditional and Roth IRAs are always available, although deductible Traditional contributions may be prohibited by income. Roth is available to nearly all investors by direct contribution or use of the [[Backdoor Roth|Backdoor Roth IRA process]].||Traditional contributions are always available, but Roth is only available if the plan allows it. Plans that allow [[After-tax 401(k)|after-tax]] contributions and either in-plan Roth rollovers or in-service distributions can be used to make '''Mega Backdoor Roth''' contributions up to the Section 415 limit ($58,000 for 2021).||Depends on the employer plan and the investor's income.
|-
| '''[[Roth IRA conversion|Roth Conversions]]'''||Traditional IRAs always allow Roth conversions to a Roth IRA.||Roth conversions are only possible from an employer plan while the employee is working if the plan offers either In-Service Withdrawals (which allow rollover to a Roth IRA), or a Roth sub account and in-plan Roth rollovers. Investors can always roll money out of an employer plan (into a Traditional or Roth IRA) when they separate from their employer, which is a more common situation for wanting to do Roth conversions.||Although not common, employees who may want Roth conversions while working should keep some pre-tax money in a Traditional IRA if their employer plan does not allow Roth conversions.     
|-
| '''Employer Contributions/ Matching'''||IRAs are individual accounts, and have no matching.||Some employer plans offer employer matching contributions, usually 50% or 100% up to some limit. Solo 401(k)'s allow large employer contributions, which effectively raises the contribution limit for the self-employed. ||Employer plan, if matching is offered. Getting an employer match should be a top [[Prioritizing investments|financial priority]].
|-
| '''Investment Choices'''||IRAs allow a wide range of [[IRA#Allowable_investments|investments]], and this can be expanded further with a Self-directed IRA.||Employer plans only allow a set of investments offered by the plan, which may be undesirable. Some plans have a brokerage option allowing trading of stocks and ETFs, and occasionally a plan will have unusual investments (a [[Stable value fund|stable value fund]], annuities, real estate funds, etc.) that could be uniquely valuable to certain investors. For the self-employed, [[Solo 401(k) plan|Solo 401(k)'s]] are available at no cost and with a similarly wide range of investment choices as an IRA, and Self-directed Solo 401(k)'s are available that are similar to Self-directed IRAs.||IRA when compared to most employer plans, and a tie compared to a Solo 401(k). Exceptions exist.
|-
| '''Fees'''||IRAs are available from many custodians for no cost and only the expenses within investments (~0.1% per year or less). ||Employer plans can have much higher fees (~1-2%+ per year) than IRAs. However, employer plan fees have come down on average in recent decades, and many are competitive with IRAs. Some plans offer "institutional class" or other funds with even lower expenses than similar funds in a retail IRA.||Usually the IRA, although exceptional employer plans are slightly better than IRAs.
|-
| '''Compatibility with [[Backdoor Roth|Backdoor Roth IRA]]'''||Pre-tax Traditional (along with SEP and SIMPLE) IRA balances interfere with the Backdoor Roth IRA||401(k) and 403(b) balances do not interfere with the Backdoor Roth IRA.||Major advantage to the employer plan for pre-tax money for those wishing to make Backdoor Roth IRA contributions.
|-
| '''Early (before age 59½) distribution options'''|| Exceptions to the age 59½ rule: disability, education expenses, [[Substantially equal periodic payments|SEPP]], first-time homebuyers (up to $10,000), IRS levy, medical expenses, unemployed health insurance premiums<ref name="early distributions">[https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions Tax on early distributions], IRS</ref>. Roth IRAs also allow withdrawal of contributions at any time without penalty, which allows [[Roth IRA as an emergency fund|great flexibility]]. ||Exceptions to the age 59½ rule: disability, [[Substantially equal periodic payments|SEPP]], IRS levy, medical expenses, separation from service age 55 or older.<ref name="early distributions"/> Plans may offer hardship withdrawals and/or in-service withdrawals, but whether these withdrawals incur penalties is subject to IRS rules. Some plans also allow loans to the participant. Employer plans are allowed to involuntarily roll small ($1,000-5,000) balances into an IRA upon separation, and cash out very small (<$1,000) balances, possibly generating taxes and penalties unless the owner takes positive steps to roll the balance into an IRA. || The Roth IRA has a major advantage over all other retirement accounts. Otherwise, close to a tie; it depends on the plan options and the situation.
|-
| '''[[Asset protection|Asset Protection]]<ref group="note">Asset protection is a complex legal subject that is further complicated due to many laws being state-specific. The information presented here is only high-level, and as noted on the [[Asset protection|wiki page]], legal ambiguity exists in some areas. For asset protection legal advice, consult a competent asset protection attorney in your state.</ref> '''||IRAs receive state-level protection from civil judgments, which varies widely by state. Traditional and Roth IRAs are exempt from federal bankruptcy up to $1.0M, and SEP and SIMPLE IRAs receive unlimited exemption. Can be divided in a "transfer incident to a divorce."||ERISA 401(k) and 403(b) plans are protected from civil judgments and bankruptcy at the federal level. Solo 401(k)'s are generally not ERISA plans, and receive state-level protection similar to IRAs. Can be accessed by a [[Asset_protection#Qualified_domestic_relations_order_(QDRO)|Qualified Domestic Relations Order (QDRO)]]. ''(Not all 403(b)'s are ERISA plans.)''||ERISA employer plans have an advantage over IRAs. Solo 401(k)'s are about equal to IRAs. Highly dependent on the state.
|-
| '''[[Required Minimum Distribution|Required Minimum Distributions]]'''||Traditional IRAs generally require RMDs starting at age 72. Roth IRAs have no RMDs. ||Traditional and Roth 401(k)'s and 403(b)'s require RMDs at age 72, but they are waived if you are still working. Roth 401(k)'s and 403(b)'s have RMD's after age 72 or you stop working, but these can be avoided by rolling over into a Roth IRA. Traditional and Roth Solo 401(k)'s start RMDs at age 72 regardless of whether you're still working. ||Employer plans have an advantage for those working after age 72 and looking to avoid RMDs. Otherwise, close to a tie. 
|-
| '''Inheritance'''||When inheriting an IRA, spouses generally have the option to (1) treat the IRA as their own, (2) roll the IRA into their own IRA or into an employer plan, (3) treat the IRA as an [[Inheriting an IRA|Inherited IRA]], (4) cash out the IRA with whatever tax liability results, or (5) disclaim the IRA and let it pass to the contingent beneficiary. Non-spouses must treat the IRA as an inherited IRA, which has [[Required_Minimum_Distribution|distribution requirements]].||Spouses generally have the same options as they would inheriting an IRA. Some employer plans allow beneficiaries to [[401(k)#Beneficiaries|leave the balance in the plan]], and take RMDs like an IRA. Otherwise, the balance is rolled out into the appropriate type of inherited IRA.||Tie
|}

==Notes==
<references group="note"/>

==See also==
*[[Roth IRA]]
*[[Non-deductible Traditional IRA]]
*[[Prioritizing investments]]
*[[Inheriting an IRA]]
*[[IRA Rollovers and Transfers]]
*[[SEPP:Substantially Equal Periodic Payments]]

==References==
{{Reflist|30em}}

==External links==

===IRS===
*[http://www.irs.gov/publications/p590a/ Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)], [http://www.irs.gov/pub/irs-pdf/p590a.pdf (PDF)]
*[http://www.irs.gov/publications/p590b/ Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)], [http://www.irs.gov/pub/irs-pdf/p590b.pdf (PDF)]
*[http://www.irs.gov/pub/irs-pdf/p590.pdf  IRS Publication 590 Individual Retirement Arrangements (IRAs)], 2013. Superseded by 590-A and 590-B.
*[http://www.irs.gov/formspubs/content/0,,id=177976,00.html IRS Whats New: IRAs and Other Retirement Plans]
===Bibliography===
{| border="0"
||
*Holden,Sarah, Ireland,Kathy, Leonard-Chambers,Vicki and Bogdan, Michael, ''[http://www.ici.org/pdf/per11-01.pdf The Individual Retirement Account at Age 30: A Retrospective]'',  Investment Company Institute Vol.11 No.1 (February, 2005).   
*Reichenstein, William, ''[http://www.tiaa-crefinstitute.org/institute/research/trends_issues/ti_annuities_1006.html Tax-Efficient Sequencing Of Accounts to Tap in Retirement]'', TIAA-CREF Institute (October, 2006).  TIAA-CREF Trends and Issues.
|}

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