What is an IRA?

Answer:
An IRA can be Roth, SIMPLE or Traditional. Many

people prefer the Traditional IRA because the contributions to it are tax deductible. However, when the money is withdrawn from the Traditional IRA it is taxed as ordinary income.

The idea behind this is that your income should be lower when you retire than it is when you are working so you will be in a lower tax bracket at that time. This means that by deferring your taxes on the Traditional IRA income until that time you will save money on your taxes. This IRA is only favorable if you are in a lower tax bracket when you retire and withdraw the money than you are when you earn it.


	more Q&A sessions like this
	What is a Traditional IRA? What is a Roth IRA? What is a SIMPLE IRA? What is a Qualified Retirement Plan? What is an Education IRA? What are Qualified Annuities? What are Retirement Annuities? What is a Rollover? What is a Profit Sharing Plan? Is my Life Insurance Policy Tax Deductible? Are There any Vehicle Tax breaks for the Self-Employed? What are the tax benefits of a home equity loan? Are there tax benefits to Student Loans?