Individual Retirement Account. A tax-deferred retirement account for an individual that permits individuals to set aside money each year, with earnings tax-deferred until withdrawals begin at age 59 1/2 or later (or earlier, with a 10% penalty). The exact amount depends on the year and your age. IRAs can be established at a bank, mutual fund, or brokerage. Only those who do not participate in a pension plan at work or who do participate and meet certain income guidelines can make deductible contributions to an IRA. All others can make contributions to an IRA on a non-deductible basis.
Such contributions qualify as a deduction against income earned in that year and interest accumulates tax-deferred until the funds are withdrawn. A participant is able to roll over a distribution to another IRA or withdraw funds using a special schedule of early payments made over the participant's life expectancy.

Use IRA in a sentence

John decided to put 4% of his salary into a company sponsored IRA. Since it was pretax dollars, he was able to put even more money into the account.

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His IRA was all set up and ready to go, which made him feel very relaxed and relieved as well.

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When I first started at my company, my boss took me aside and told me that I should put as much money away for retirement in my IRA as I could afford.

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revoked IRA Single-Premium Deferred Annuity