3641 / What is an individual retirement plan? What is an individual retirement account and a Roth individual retirement account?
A traditional individual retirement plan generally allows an individual to contribute both deductible (where eligible) and nondeductible payments to receive the benefit of tax-deferred buildup on income.
Alternatively, a Roth individual retirement plan allows eligible individuals to contribute only nondeductible payments with the benefit of tax-free buildup of income ( Q 3673). A Roth individual retirement plan must clearly be designated as such at the time of establishment, and that designation cannot later be changed; the recharacterization of a Roth IRA will require the execution of new documents ( Q 3662).1 Note that tax reform eliminated the traditional ability to convert traditional IRA funds to a Roth account and later recharacterize the transaction for tax years beginning after 2017.
With respect to both traditional and Roth individual retirement plans, some individuals also may contribute to such plans for their spouses.