The federal government established Individual Retirement Arrangements (IRAs) to encourage people to save for retirement. Depending on the type of arrangement, you or your employer (depending on the type of IRA), may set up the IRA at a financial organization such as a financial services firm, bank, credit union, or savings and loan institution.

IRAs allow you to invest your money and let it grow tax-deferred, and in some cases tax-free. Deferring the payment of taxes on your earnings is a tremendous advantage to you because all of the money that would have been paid as taxes can continue to grow in your retirement plan year after year.