Glossary
IRA (Individual Retirement Account)
An IRA (individual retirement account) is a tax-advantaged retirement account a person opens on their own, independent of any employer, in traditional (pre-tax) or Roth (after-tax) form.
Annual contribution limits are far lower than 401(k) limits, but IRAs offer nearly unlimited investment choice and full portability. IRAs are also where employer-plan money typically lands after a rollover, so balances often dwarf annual contributions. Deductibility and Roth eligibility depend on income and workplace-plan coverage.
Why it matters in practice
For anyone without a workplace plan — including many gig workers and employees of small businesses — the IRA is the primary retirement vehicle available. For everyone else it is the flexible companion account: the destination for rollovers, the home of backdoor Roth contributions, and often the lowest-cost place assets ever sit.
Related terms: Traditional IRA · Roth IRA · Rollover · 401(k) · Beneficiary