Business, Legal & Accounting Glossary
An IRA – Individual Retirement Account – is a tax-sheltered investment account available to US taxpayers. Contributions to an IRA are allowed to compound free of taxes until they are withdrawn. IRA contributions may also be tax-deductible. Funds withdrawn from an IRA are taxed as normal income at the rate in effect at the time of withdrawal. A Roth IRA is an IRA where the contributions are taxed, but withdrawals can be made tax free.
IRAs are self-managed investment accounts and allow for a very wide range of activity. In addition to equities, brokers may give IRA holders access to government and corporate bonds and options. Because IRAs are restricted by law from trading on margin, not all options strategies are available.
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This glossary post was last updated: 9th February, 2020