IRA

An IRA, or individual retirement account, is an account you open yourself at a financial institution, rather than through a job, to hold retirement savings with tax advantages set by US law. To contribute, you generally need earned income.

It comes in two tax versions. With a traditional IRA, contributions may be deductible and withdrawals in retirement are taxed as income. A Roth IRA gives no deduction now, and qualified withdrawals are tax free. Income can limit Roth contributions and sometimes traditional deductions.

For 2026, contributions across all your IRAs are capped at $7,500, or $8,600 if you are 50 or older, and cannot exceed your taxable compensation. An IRA is a container: investments inside can lose value. Money withdrawn from a traditional IRA before age 59 1/2 generally owes income tax plus a 10 percent extra tax, with exceptions.