An IRA, or individual retirement account, is an investment account designed to assist individuals in saving for their financial future. An IRA can be established by individual tax payers, where they can contribute up to the maximum allotted amount on an annual basis. Contributions to an IRA may be tax deductible, depending upon the individual tax bracket of the account owner. When contributions are withdrawn after age 59 1/2, the funds are taxed as ordinary income, including any applicable capital gains.