An IRA is a personal savings plan that offers tax advantages to save and invest for retirement. Contributions can be tax-deductible, depending on individual circumstances, such as participation in an employee-sponsored plan such as a 401(k). Earnings in a traditional IRA grow without being taxed until they are withdrawn, while in a Roth IRA, withdrawals are completely tax-free, if the requirements are met. Withdrawing money from an IRA before age 59 1/2 may result in tax penalties. Contributions to all IRAs must not exceeed $3000 for an individual (as of tax year 2004).