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IRA
(Individual Retirement Account)
An IRA (Individual Retirement Account) is a tax-advantaged investment account for retirement savings. Unlike employer-sponsored 401ks, IRAs are self-managed, with contributions limited to $6,500/year ($7,500 if 50+) in 2023.
Traditional IRAs offer tax-deferred growth (taxed at withdrawal), while Roth IRAs use post-tax contributions for tax-free withdrawals. IRAs can hold stocks, ETFs, bonds, and more. Early withdrawals before age 59½ incur a 10% penalty, with exceptions like first-time home purchases. The SEC warns of contribution limits and income caps (e.g., Roth IRAs phase out at $153,000 single filer income). Ideal for freelancers or those maxing out 401ks.
Traditional IRAs offer tax-deferred growth (taxed at withdrawal), while Roth IRAs use post-tax contributions for tax-free withdrawals. IRAs can hold stocks, ETFs, bonds, and more. Early withdrawals before age 59½ incur a 10% penalty, with exceptions like first-time home purchases. The SEC warns of contribution limits and income caps (e.g., Roth IRAs phase out at $153,000 single filer income). Ideal for freelancers or those maxing out 401ks.