Definition
Individual retirement account (IRAccount )is the account version of an individual retirement arrangement, and is issued by a bank, credit union, brokerage firm, savings & loan, or other financial institution that satisfies the requirements established under the tax code IRC § 408(n).
There are several versions of an IRAccount, (a) traditional IRAccount, where assets accrue earnings on a tax-deferred basis and distributions are treated as ordinary income, (b) Roth IRAccount, where assets accrue on a tax-deferred basis, but qualified distributions are tax-free (c) SEP IRAccounts, which are established and funded by business owners/employers for their employees.
Referring Cite
IRC § 408(a), IRS Publication 590
Additional Helpful Information
See the definition of IRA for more, including income limits for Roth IRAs and eligibility requirements.