IRA definition: An Individual Retirement Account (IRA) is a type of investment vehicle you can use to help save for or manage your money in retirement. With an IRA, you choose individual investments — similar to the way you choose investments in a 401(k) or 403(b).
Even if you’re already saving in an employer-based retirement program, you may be able to still use an IRA as an additional way to save for retirement.
The three most common types of IRAs are Traditional, Roth, and SEP. Depending on the type of IRA you choose, your earnings can grow either tax-deferred or tax-free.
If you receive self-employment income, a Simplified Employee Pension Plan (SEP IRA) is a tax-deferred retirement plan that you can use to save for retirement for yourself and/or your employees.
Here are some questions to think about when choosing an IRA: