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ira is abbreviation for (Individual Retirement Arrangement), what I don't understand: what is the relation between (retirement) word and a brokerage account? or does this word have different meaning here?

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IRA is an Individual Retirement Arrangement.

An account that is an IRA can be at a bank, credit union, a broker, a mutual fund family. Inside that IRA you can invest in stocks, bonds, Certificates of deposit

According to the IRS: Topic No. 451 Individual Retirement Arrangements (IRAs)

An individual retirement arrangement (IRA) is a tax-favored personal savings arrangement, which allows you to set aside money for retirement. There are several different types of IRAs, including traditional IRAs and Roth IRAs. You can set up an IRA with a bank, insurance company, or other financial institution.

An IRA has a set of rules regarding when you can take distributions, how they are taxed, and annual limits.

Some people also have access though their employers a 401(k) or other similar retirement account. To make things even more confusing many times the 401(k) is manged by one of the large investment companies. The IRA and 401(k) have different rules.

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  • but I'm not from u.s, does this description apply for non u.s? – huab Jun 22 at 13:51
  • Based on your answer, I conclude that ira is a common term in united states, and not limited to trading ,, thank you – huab Jun 22 at 13:52
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    @huab - Terms like IRA and 401K are based on the language in the US tax code. Your country may have similar constructs, but they might have different names. – JohnFx Jun 22 at 21:36
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IRA is a special type of tax-advantaged account in the USA that is intended to encourage people to save and invest for their own retirement. In general, if you pull money out of an IRA before you reach retirement age, you lose the tax advantages and may even have to pay a penalty.

Merriam-Webster defines Retirement as:

1a : an act of retiring : the state of being retired

b : withdrawal from one's position or occupation or from active working life

c : the age at which one normally retires: reaches retirement in May

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  • Though the penalty for withdrawal is simply based on calendar age: there's no requirement that you actually be retired. – jamesqf Jun 22 at 17:02

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