An individual retirement account where only the owner of the account may contribute. The contributions to the account are with pre-tax dollars and earnings accumulate tax free, but any withdrawals from the account are then taxed. Max annual contribution per year is $6,000, but individuals over 50 can make a “catch-up” contribution of an extra $1000. Once the owner reaches 72 years of age, they must make a Required Minimum Distribution (RMD) each year after this. This is a withdrawal that allows the government to collect taxes on a certain amount of the account value. The total withdrawal amount is a formula based on the estimated number of years left in one’s lifetime and the total value of the IRA account. The RMD can either be taken out in cash or transferred to a different non-retirement account.