Individual retirement arrangement (IRA) is an umbrella term that covers individual retirement accounts and individual retirement annuity. These are retirement savings vehicles established by individual taxpayers.
There are several versions of an individual retirement arrangement,
(a) traditional IRAs, where assets accrue earnings on a tax-deferred basis and distributions are treated as ordinary income,
(b) Roth IRAs, where assets accrue on a tax-deferred basis, but qualified distributions are tax-free
(c) SEP IRAs, which are established and funded by business owners/employers for their employees. The funding vehicle for a SEP IRA is a traditional IRA and
(d) SIMPLE IRAs, are established and funded by business owners/employers for their employees. Employees may also make salary deferral contributions to SIMPLE IRAs, and versions of SEPs that are referred to as SARSEPs.
(Source: Retirement Dictionary)