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Introduction to IRA Accounts

What is an IRA?

An IRA is an Individual Retirement Arrangement, commonly referred to as an Individual Retirement Account. An IRA allows an individual to save and invest money today for future use.  The IRS, which defines all regulations and benefits associated with these accounts, allows tax advantages for your IRA - as long as it follows the rules set forth for each account type.
To get started, the IRA holder will set up an account with an IRA provider (a step that is required by the IRS), and then contribute cash into the account. That cash can then be used to buy assets that the IRA holder thinks will make money for the account. These investments perform over time in a tax-advantaged status. When the account holder reaches legal distribution age, the IRA holder takes distribution of the cash and/or assets in the account.

Account types

What are the IRA Account Types as Defined by IRS?

Traditional IRA

In a Traditional IRA, cash is contributed into the account "pre-tax," which means the cash is tax-deductible. That cash can then buy assets (stocks, real estate, gold, etc.) When the account holder reaches 59.5 years of age, she or he can withdraw from the account and pay taxes on the amount withdrawn.

Roth IRA

In a Roth IRA, cash is put into the account "post-tax." That cash can then buy assets (stocks, real estate, gold, etc.). When the account holder reaches 59.5 years of age, she or he can withdraw from the account tax-free.


This account type allows an employer (typically a small business or self-employed individual) to make contributions into an IRA established in the employee’s name, instead of into a pension fund in the company's name.  A SEP IRA (Simplified Employee Pension) provides the same tax advantages for the account holder as a Traditional IRA.


A SIMPLE IRA (Savings Incentive Match Plan for Employees) features an employer matching and employee’s contributions into an employee’s plan. A SIMPLE IRA provides the same tax advantages for the account holder as a Traditional IRA.

Beneficiary IRA

A Beneficiary IRA is also known as an Inherited IRA. At the time of death, the cash and assets in the IRA pass on to the designated beneficiaries for that account. There are some special rules that apply to an IRA that is inherited by a beneficiary. Learn more about Inherited IRA Distributions.

What Other Account Types Does NDIRA Offer?

Solo 401(k) Plan

A Solo 401(k) plan is an employer-sponsored retirement account tailored for self-employed persons (i.e. companies without employees). This account type extends the same benefits included  in company based 401(k) plans. Solo 401(k) plans provide increased contribution limits, tax deferred advantages, and flexible plan designs.

HSA (Health Savings Account)

A Health Savings Account (HSA) is a tax advantaged savings account for current and/or future medical expenses. In 2004, Congress created the HSA as a tool to address the growing cost of healthcare and increase the efficiency of the healthcare system. Coupled with a high-deductible health plan, HSAs offer consumers a way to have more control over their healthcare choices and costs while simultaneously saving for future health expenses.


Coverdell Education Savings Accounts (ESAs) are tax-advantaged accounts that can be used to fund future education expenses like tuition, books and more for the account holder's children or beneficiaries. Money put into the account before the beneficiary is 18 years old grows tax-deferred in the ESA and can be withdrawn tax-free for qualified education expenses at a qualified primary, secondary, and college-level institution. ESAs can invest in any asset that other IRAs can invest in.

What assets can your IRA buy?

Basic IRA providers only offer public investment opportunities like stocks, bonds, CDs, and mutual funds. Public investments are usually subject to SEC mandated reporting and public disclosure. Although this type of monitoring is helpful for due diligence, it also means that all investors have the same information.
New Direction IRA provides the innovative retirement investor access to private and public assets. Private investing allows you to capitalize on individual expertise – maybe the house down the street is undervalued, or a borrower needs money and is willing to pay a premium for it, or a friend’s  promising start-up company needs investor capital.

Achieve real diversification. Adapt to any economic climate. Rely on your own expertise, research, and strategy. Put your personal knowledge to work.