An individual retirement arrangement is a tax-deferred retirement savings plan, and for some individuals, a pretax retirement plan. Individual retirement arrangements include individual retirement accounts and individual retirement annuities. Typically, individual retirement annuities are offered by insurance companies and brokerage firms.
Contributions to an individual retirement annuity follow the same rules as those for individual retirement accounts. An individual can contribute to an individual retirement annuity in his or her own name. Spousal individual retirement annuities can also be established. The deductibility rules are also the same as those for individual retirement accounts. So, if you or your spouse are not covered by a retirement plan, your individual retirement annuity contribution is fully deductible. If you or your spouse are covered by a retirement plan, your contribution deduction may be limited. You can establish both types of IRAs, but you can’t contribute more than the maximum annual IRS-allowed amount, in total, to these individual retirement arrangements.
