IRA (Individual Retirement Account) represents a retirement account, usually offering various tax
advantages and benefits in view of retirement savings.
There are several different kinds of individual retirement accounts. They are either provided by the employer or
alternatively, the plan may be self-provided. They cover several types of accounts, explained below.
Roth IRA refers to individual plans with tax free contributions; the taxes do not have bearing on
transactions. This type of account is named after the USA lawyer and Senator William Roth. The Traditional IRA
represents an arrangement that allows the persons to pay income tax only after he begins to make withdrawals.
However, early withdrawals result in considerable penalty fees. There are limits on the annual contributions
made to the traditional and Roth accounts. The latter are stipulated by the government.
The SEP IRA is a provision designed for an employer (this may be a relatively small business entity or a
self-employed professional). Contributions will be made in a similar manner to the traditional form, but the
account is set in the name of the employee.
The Simple IRA refers to an employee type of pension plan according. Here, the contributions are made by
the employee and the worker. The Self-Directed IRA entitles account holders to act on behalf of their plans with
regard to investments.
The two additional types of individual retirement are referred to as Conduit and Rollover IRA. Some say
that they can be regarded as anachronistic under the current tax regulations. The tax treatment of the above
mentioned categories of retirement accounts, with the exception of Roth IRAs, are substantially similar in view
of rules that regulate the distributions and withdrawals. Additional rules guide the arrangements under SEP IRAs
and the SIMPLE IRAs. However, they are typically very close to the rules that regulate the qualified plans.
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