In general two types of IRAs exist: a traditional IRA and a Roth IRA.   A traditional IRA allows you to save up to $5,500 a year (or $6,500 a year, if you’re fifty or older.)  Your contributions to a traditional IRA aren’t taxed. The growth in value of the account is not taxed while it remains in the account.  However, when you start to draw the amounts out (after your age 59 ½), you’ll be taxed at the future ordinary income tax rate for the amount you take out.   A Roth IRA has the same contribution limits as a traditional IRA.  But, in a Roth IRA, your contributions are taxed in the year they are made.  Like the traditional IRA, the account grows tax-free.  The key benefit to having a Roth IRA is that, when you take the money out of the account at retirement, no taxes are due, since you paid taxes on the initial amounts that went into the account.