What is IRA ? What is full form of IRA ?

What is full form of IRA ?

The term "IRA" stands for Individual Retirement Account.

 

 I - Individual 
 R - Retirement 
 A - Account 

An Individual Retirement Account is a type of investment account that offers tax advantages to help individuals save for retirement. 

There are different types of IRAs, including Traditional IRAs and Roth IRAs. Here's a brief explanation of each:

 Traditional IRA :  

Contributions to a Traditional IRA may be tax-deductible, meaning you can potentially reduce your taxable income in the year you contribute. The funds in the account grow tax-deferred, which means you don't pay taxes on any investment gains until you withdraw the money in retirement. However, when you withdraw funds from a Traditional IRA during retirement, those withdrawals are typically subject to income tax.


 Roth IRA : 

Contributions to a Roth IRA are made with after-tax money, which means you don't get a tax deduction for the contributions. However, the funds in a Roth IRA grow tax-free, and qualified withdrawals made during retirement are tax-free as well. Roth IRAs also offer the advantage of not having required minimum distributions (RMDs) during the account holder's lifetime, unlike Traditional IRAs.

Both Traditional and Roth IRAs have contribution limits and eligibility requirements set by the IRS. It's essential to consult with a financial advisor or tax professional to understand the specific rules and benefits of each type of IRA and determine which one may be more suitable for your individual financial situation and goals.