Almost anyone can open an Individual Retirement Account, better known as an IRA. This is a retirement investing tool that is not run by an employer. If you want to open this account, you just have to ask a bank, brokerage firm, or other financial institution on how to file an application and make a contribution.

Generally, after you retire, your IRA account will grow tax free until you withdraw the amount. However, there are factors that will determine which type of IRA that you are eligible for. Some of these factors include type of income and amount of adjusted gross income, participation in an employer-sponsored retirement plan, and age.

Basically, there are four types of IRAs, the traditional IRA, the Roth IRA, the SIMPLE IRA, and the SEP IRA. The traditional IRA is one of the most commonly considered retirement account. Here, money is deposited without being taxed and earns interest over time. The earnings are also not taxed and the money will only be taxed when it is withdrawn at retirement.

The Roth IRA is another type of IRA that is meant to help individuals save money for retirement by giving them tax advantages. It differs from the traditional IRA because the money invested here is taxed before it is deposited into the account. But it also accumulates interest tax free until the money is withdrawn at retirement.

The last two types, the SIMPLE IRA and the SEP IRA, are retirement plans established by employers. In a SIMPLE IRA, there are lower contribution limits and a simpler administration of the money. This is quite similar to SEP IRA, which allows an employer to make contributions toward the employees’ retirement.

Anyone who is considering an individual retirement account is considering a quality investment account. But it is always best to consult a financial advisor to help you decide which IRA is best for your retirement needs.