An IRA is an individual retirement account in the United States that lets you save and invest for retirement with special tax advantages.

Quick scoop

  • An IRA is a personal account you open at a bank, brokerage, or similar institution to hold investments like stocks, bonds, or funds for retirement.
  • Its main benefit is tax help: growth is typically tax-deferred or tax-free, depending on the type of IRA.
  • The U.S. government sets annual contribution limits and rules about when and how you can withdraw the money.

Main types you’ll hear about

  • Traditional IRA: You may get a tax deduction for contributions, and the money grows tax-deferred; you pay income tax when you withdraw in retirement.
  • Roth IRA: You contribute after‑tax money, but qualified withdrawals in retirement (including earnings) are tax‑free.
  • Other types (often for self‑employed or small businesses) include SEP IRAs and SIMPLE IRAs, which follow similar tax‑advantaged retirement‑savings rules.

Why people use IRAs

  • To build a dedicated retirement nest egg with tax benefits that can help savings grow faster than in a normal taxable account.
  • To supplement or replace employer plans like 401(k)s if those are unavailable or not enough.

Note: “IRA” can also mean “Irish Republican Army” in non‑financial contexts, but in personal finance it almost always refers to an individual retirement account.

If you tell me your country and whether you already have a 401(k) or similar plan, I can outline which IRA type usually makes the most sense at a high level.