Traditional IRA

Thinking about a traditional IRA? An IRA or individual retirement account is a way to build your own personal retirement savings account. Money is invested now, allowed to accumulate earnings, and then can be taken out during retirement. A traditional IRA is one way to build a retirement account.

Most firms offering mutual funds offer IRAs. If you're self-employed or simply looking for a way to add to your 401(k), a traditional IRA may be what you're looking for.

Like a 401(k), a traditional IRA provides tax advantages now. That is, before-tax income may be contributed to an IRA. Or to put it another way, any contributions made now to a traditional IRA are not subject to tax.

However, when you pull the funds out during retirement, the funds are subject to tax. A Roth IRA provides an alternative tax situation.

You can have more than one IRA, but you can only contribute $5,000 per year to your IRA accounts. Why the IRS would want to inhibit people's ability to build up funds for retirement could be anyone's guess, but they probably want to limit the tax advantages.

To find an IRA, visit sites of financial companies like Fidelity, Vanguard, or T Rowe Price.

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