Small Business Dictionary

Individual Retirement Account (IRA)

An Individual Retirement Account (IRA) is a traditional investment account that enables you to save a specific amount each year per IRS guidelines, then deduct that amount directly from your taxes. With an Individual Retirement Account (IRA), distributions can be made without penalty at age 59.5; however, prior to that, you must pay taxes when you withdraw the money. Similar solutions for small business owners include SEP and SEP IRA.