If the money invested through an IRA is withdrawn before the investor turns 59 1/2, it is subject to a penalty of 10 percent. Therefore, it is unclear whether an IRA is preferred to an ordinary investment or not. If the money remains invested in an IRA for a sufficient time, the IRA breaks even despite the penalty. In this paper, and expression is derived for the break-even period for a partially withdrawn. It is shown that the break-even periods are shorter than previously thought. Some simples rules of thumb are proposed for circumstances when the IRA will be attractive and the circumstances when investors should stay away from the IRA. Key Words: individual retirement accounts, emergency funds, income tax, retirement planning, investment

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