what is an IRA and how does it wrks?

Answer 1

IRA = Individual Retirement Account

Regular , you put $$$ in and do not have to pay income taxes on it until you retire .

Roth , you put the $$$ in but pay the income taxes on it now . All the future growth is however , excluded from taxation later .
Best for people who want tax free growth and not to have their income bracket bumped up during retirement ( esp since AMT may be a problem )

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Answer 2

An IRA, Individual Retirement Account, is an account that allows you to invest money now and defer the taxes on that money to when you retire.

A very simple example but: Lets say you owe $8000 in taxes this year and you are in the 25% tax bracket. If you have an IRA you can pay yourself by depositing $4000 dollars in your own account, which would lower your taxes to $7000. You save $1000 by paying yourself $4000.

You do not pay taxes on that $4000 dollars untill you take the money out when you retired. The idea is that when you are retired you should be in a lower tax bracket because you won't be collecting an income.

Answer 3

IRA denotes the individual retirement account and can substitute or complement a 401 K. There are 3 varieties of IRAs available: Roth IRAs, Traditional IRAs and Simple IRAs. Traditional IRAs offer you tax advantages whenever you deposit or add money to your account. On the other hand, a Roth IRA offers you the maximum tax benefit when you withdraw money from your account. A Simple IRA is just like a 401K with lower contribution limit, but cheaper and has lesser paperwork.
http://debts-to-wealth.com/category/Retirement-Planning.html

Answer 4

IRA stands for Individual Retirement Account. You can put up to $2,000 per year aside. Depending upon your income and any other retirement plans you are eligible for, the money you deposit can be excluded from the amount of your income subject to taxes. Any interest or gains on the money is exempt from taxes until you withdraw it. You have to pay tax on the money when you withdraw it and you have to pay all the tax plus a 10% penalty if you take the money out before you are 59 and a half.

The ROTH IRA allows you to put in money after you have paid taxes on it but the earnings can be withdrawn without paying any taxes.