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February 17, 2009

Individual retirement account (IRAccount)

Your Guide

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Definition

Individual retirement account (IRAccount )is the account version of an individual retirement arrangement, and is issued by a bank, credit union, brokerage firm, savings & loan, or other financial institution that satisfies the requirements established under the tax code IRC § 408(n).

There are several versions of an IRAccount, (a) traditional IRAccount, where assets accrue earnings on a tax-deferred basis and distributions are treated as ordinary income, (b) Roth IRAccount, where assets accrue on a tax-deferred basis, but qualified distributions are tax-free (c) SEP IRAccounts, which are established and funded by business owners/employers for their employees.

Referring Cite

IRC § 408(a), IRS Publication 590

Additional Helpful Information

See the definition of IRA for more, including income limits for Roth IRAs and eligibility requirements.

 

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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