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From the comments at: https://money.stackexchange.com/a/85769/4522

One poster called an IRA an:

Individual Retirement Account

Another stated it was an:

Individual Retirement Arrangement

What does the IRA abbreviation actually stand for?

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  • 86
    Irish Republican Army. – RonJohn Oct 5 '17 at 14:47
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    @RonJohn "Though you pay off your tax with the shirt off your backs, you don't know what the government's planned. They will send you a bill for a cool 50 mil, though your income be just 20 grand. When IRS guys are smiling, watch your taxes multiply. If they say you missed a filing, kiss your blarney house good-bye. Their audits gave me an Ulster, and my taxes are Dublin, they say. So I'll give the address of the IRS to my friends at the IRA." - DC Comedy Troupe The Capitol Steps – corsiKa Oct 5 '17 at 19:12
  • I took a class in retirement options years ago where the instructor said it was Individual Retirement Agreement. Now that I think about it, Arrangement makes more sense. – Adrian McCarthy Oct 5 '17 at 23:03
  • @RonJohn: And in practice it usually refers to a Provisional retirement arrangement. – Steve Jessop Oct 6 '17 at 11:30
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    @SteveJessop And if you decide to continue with it, does it become a Real IRA? – Oscar Bravo Oct 6 '17 at 12:20
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It means both.

The IRS currently calls them Individual Retirement Arrangements, as seen on the titles of Publications 590-A and 590-B.

However, in the tax code, they are called Individual Retirement Accounts (Title 26, Section 408).

In my experience, you will see it described as Individual Retirement Accounts nearly everywhere you look except for the IRS publications.

They all refer to the same thing, and there really is no distinction between the two. I believe that the IRS changed the name to Arrangement because an IRA can encompass a variety of assets, some of which are difficult to describe as "accounts."

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    I suspect "account" wasn't inclusive enough... I wonder if you pull on that thread, where does it lead? – Harper Oct 5 '17 at 19:46
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    A ruined sweater, for one. – Wayne Werner Oct 5 '17 at 20:01
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    "some of which are difficult to describe as 'accounts.'" I've heard about people buying a racing horse for their IRA. I can concur that a horse is difficult to describe as an account. – Lan Oct 6 '17 at 11:57
7

The latter:

From the first sentence of the IRS publication 590-A on IRAs:

This publication discusses contributions to individual retirement arrangements (IRAs).

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    I would add that the terms "Individual" and "Retirement" are much more important than "arrangement" vs "account" – D Stanley Oct 5 '17 at 15:27
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IRA : individual retirement account is an investing tool used by individuals to earn and designate funds for retirement savings. Also Known as Individual Retirement Arrangements : Sometimes referred to as individual retirement arrangements because IRAs can consist of a range of financial products such as stocks, bonds or mutual funds.

Reference : IRA - Investopedia

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    good answer but try and improve by adding some references to validate what is said – GµårÐïåñ Oct 5 '17 at 18:41
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    This looks like a quote from a web site. Please add an attribution and link to the original. – Barmar Oct 5 '17 at 21:47
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It means both, because the Individual Retirement Account implements an Individual Retirement Arrangement.

EDIT: this should not be construed to mean that this is a person's only implementation of an Arrangement.

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  • Not quite. An individual can have only one Individual Retirement Arrangement (IRA) but within this Arrangement, the individual can hold many investments that can (and usually are) referred to as Individual Retirement Accounts or IRAs. The annual contribution limit etc all apply to the IRA and not to the IRAs, a premature withdrawal is from the IRA, not an IRA within it, the basis, if any, is the basis of the IRA and not the specific IRA into which the nondeductible contribution was invested, etc. – Dilip Sarwate Oct 5 '17 at 16:25
  • @DilipSarwate that doesn't contradict what I wrote. – RonJohn Oct 5 '17 at 16:28
  • It is the use of articles "the" preceding "Individual Retirement Account"and the "an" preceding "Individual Retirement Arrangement" that is the issue; they should be the other way around because an individual can have only one IRA but multiple IRAs. – Dilip Sarwate Oct 5 '17 at 16:37
  • @RonJohn, the arrangement has accounts within it. You wrote it backwards. – quid Oct 5 '17 at 16:51
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    Yes, @quid, that was the nuance I had in mind when I commented on an IRA answer earlier today. – JoeTaxpayer♦ Oct 5 '17 at 23:30

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