What is an IRA?

Individual Retirement Accounts, or IRAs, are basically savings plans with lots of restrictions. The main advantage of an IRA is that you defer paying taxes on the earnings and growth of your savings until you actually withdraw the money. The main disadvantage is the tax law imposes stiff penalties if you withdraw the funds before you turn age 59.5 years old. There are different types of IRAs, each with their own tax implications and eligibility requirements.