What is the primary purpose of an IRA?

The primary purpose of an IRA, or Individual Retirement Account, is to save for retirement in a tax-deferred manner. This means that the money contributed to the IRA can grow without being subject to taxes until it is withdrawn, usually during retirement when individuals may be in a lower tax bracket. This feature encourages individuals to set aside funds specifically for their future retirement needs, enhancing their long-term financial security.

Unlike checking accounts, IRAs are not designed for immediate access to funds; rather, they come with restrictions on withdrawals before a certain age to encourage saving. Additionally, while IRAs can include various investments such as stocks, bonds, and mutual funds, their definition is not limited to stock market investments. The key element is the tax advantage associated with saving for retirement, which makes option B the best representation of the primary purpose of an IRA.