An individual retirement arrangement (IRA) is a personal savings plan that offers you tax advantages to set aside money for your retirement or, in some plans, for certain education expenses. Two advantages of an IRA are:

1. You may be able to deduct your contributions in whole or in part, depending on the type of IRA and your circumstances, and
2. Generally, amounts in your IRA, including earnings and gains are not taxed until distributed, or, in some cases, are not taxed at all if distributed according to the rules.

This chapter discusses:

1. The rules for a traditional IRA (those that are not Roth, SIMPLE, or education IRAs),
2. The Roth IRA, which features nondeductible contributions and tax-free withdrawals, and
3. The education IRA, which can be set up to finance higher education expenses.

Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees (SIMPLE) are not discussed in this chapter. For more information on these plans and employees' SEP-IRAs and SIMPLE IRAs that are part of these plans, see Publication 590.

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