401(k)s & IRAs For Dummies

Chapter 8

Investing in an IRA

IN THIS CHAPTER

Starting with the basics

Opening an IRA

Keeping an eye on your money

Changing locations

Individual retirement arrangements (also known as individual retirement accounts), or IRAs, came into being through provisions added to the internal revenue code (IRC) in 1978. These provisions encourage you and every other American worker to save money for retirement. Tax advantages sweeten the pot, and automatic deductions can make saving nearly painless.

This chapter clues you in to the types of IRAs available, finding the place to put your funds, keeping track of your money, and moving it if necessary.

Looking at the Basics of Your IRA

An IRA is a special type of savings and investment account that helps you save for retirement by providing specific tax advantages. (I talk about the tax issues covering retirement accounts in Chapter 2.)

Federal law limits the amount you can contribute during 2021 to an IRA (or to all your IRAs combined, if you have several) to $6,000 in a single year plus a $1,000 catch-up contribution if you’re at least age ...