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From the comments at: https://money.stackexchange.com/a/85769/4522

One poster called an IRA an:

Individual Retirement Account

Another stated it was an:

Individual Retirement Arrangement

What does the IRA abbreviation actually stand for?

blahdiblah
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Freiheit
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    Irish Republican Army. – RonJohn Oct 05 '17 at 14:47
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    @RonJohn "Though you pay off your tax with the shirt off your backs, you don't know what the government's planned. They will send you a bill for a cool 50 mil, though your income be just 20 grand. When IRS guys are smiling, watch your taxes multiply. If they say you missed a filing, kiss your blarney house good-bye. Their audits gave me an Ulster, and my taxes are Dublin, they say. So I'll give the address of the IRS to my friends at the IRA." - DC Comedy Troupe The Capitol Steps – corsiKa Oct 05 '17 at 19:12
  • I took a class in retirement options years ago where the instructor said it was Individual Retirement Agreement. Now that I think about it, Arrangement makes more sense. – Adrian McCarthy Oct 05 '17 at 23:03
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    @RonJohn: And in practice it usually refers to a Provisional retirement arrangement. – Steve Jessop Oct 06 '17 at 11:30
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    @SteveJessop And if you decide to continue with it, does it become a Real IRA? – Oscar Bravo Oct 06 '17 at 12:20

4 Answers4

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It means both.

The IRS currently calls them Individual Retirement Arrangements, as seen on the titles of Publications 590-A and 590-B.

However, in the tax code, they are called Individual Retirement Accounts (Title 26, Section 408).

In my experience, you will see it described as Individual Retirement Accounts nearly everywhere you look except for the IRS publications.

They all refer to the same thing, and there really is no distinction between the two. I believe that the IRS changed the name to Arrangement because an IRA can encompass a variety of assets, some of which are difficult to describe as "accounts."

Ben Miller
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The latter:

From the first sentence of the IRS publication 590-A on IRAs:

This publication discusses contributions to individual retirement arrangements (IRAs).

quid
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Pete B.
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    I would add that the terms "Individual" and "Retirement" are much more important than "arrangement" vs "account" – D Stanley Oct 05 '17 at 15:27
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IRA : individual retirement account is an investing tool used by individuals to earn and designate funds for retirement savings. Also Known as Individual Retirement Arrangements : Sometimes referred to as individual retirement arrangements because IRAs can consist of a range of financial products such as stocks, bonds or mutual funds.

Reference : IRA - Investopedia

Srinivas08
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It means both, because the Individual Retirement Account implements an Individual Retirement Arrangement.

EDIT: this should not be construed to mean that this is a person's only implementation of an Arrangement.

RonJohn
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  • Not quite. An individual can have only one Individual Retirement Arrangement (IRA) but within this Arrangement, the individual can hold many investments that can (and usually are) referred to as Individual Retirement Accounts or IRAs. The annual contribution limit etc all apply to the IRA and not to the IRAs, a premature withdrawal is from the IRA, not an IRA within it, the basis, if any, is the basis of the IRA and not the specific IRA into which the nondeductible contribution was invested, etc. – Dilip Sarwate Oct 05 '17 at 16:25
  • @DilipSarwate that doesn't contradict what I wrote. – RonJohn Oct 05 '17 at 16:28
  • It is the use of articles "the" preceding "Individual Retirement Account"and the "an" preceding "Individual Retirement Arrangement" that is the issue; they should be the other way around because an individual can have only one IRA but multiple IRAs. – Dilip Sarwate Oct 05 '17 at 16:37
  • @RonJohn, the arrangement has accounts within it. You wrote it backwards. – quid Oct 05 '17 at 16:51
  • @quid so... the arrangement is implemented by the account? – RonJohn Oct 05 '17 at 16:52
  • I think you could say "an account is an implementation of the arrangement" – Nosrac Oct 05 '17 at 16:53
  • No. Because you can have more than one account. An arrangement is created when the first account is opened under the IRA umbrella, but there aren't subsequent arrangements for subsequent accounts; each account does not implement its own IRA. – quid Oct 05 '17 at 16:53
  • This is hurting my head. – CactusCake Oct 05 '17 at 17:35
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    Yes, @quid, that was the nuance I had in mind when I commented on an IRA answer earlier today. – JTP - Apologise to Monica Oct 05 '17 at 23:30
  • You guys might be overthinking this. You can have multiple IRAs, and it doesn't matter if you call them accounts or arrangements. – Ben Miller Oct 06 '17 at 00:51
  • @BenMiller - I concede, the point is somewhat pedantic, so long as one knows when "IRA" is meant to refer to the aggregate sum of balances, vs an individual brokers account. – JTP - Apologise to Monica Oct 06 '17 at 10:33
  • @BenMiller, I think this question is about the pedantry. I think, either be specifically accurate or we should just close this as "who cares." – quid Oct 06 '17 at 20:02
  • @quid Yes, but we need to make sure we aren't drawing a distinction where there really isn't one. Some of the statements here in the comments are at best misleading. Saying that you can only have one "arrangement" implies that you can only have one IRA, which we all know is false. – Ben Miller Oct 06 '17 at 20:16
  • There is only a single IRA though as far as the maximums and tax rules go. There is a contribution limit that applies to your IRA which may span multiple asset classes or brokerage accounts. I can't go to Schwab and Fidelity and open an IRA at each to double my contribution. – quid Oct 06 '17 at 21:04