How do IRAs work?
An Individual Retirement Account, or IRA, is a tax-advantaged account that a person opens with a bank, brokerage, or other financial institution to save and invest for retirement on their own, separate from any workplace plan an employer might offer. The 
Securities and Exchange Commission's investor education site describes IRAs as accounts investors open with a vendor of their choice, which typically offers investment options such as mutual funds. The main types are traditional, Roth, SEP, and SIMPLE IRAs, and each treats contributions, taxes, and withdrawals differently. Anyone can generally open a traditional or Roth IRA, though how much can be contributed and deducted depends on income, age, and whether the person or a spouse is also covered by a workplace retirement plan. The IRS sets the specific dollar limits, income thresholds, and tax rules each year, so the current figures should always be checked there before contributing or filing.
The basic structure
An IRA is a personal account rather than an employer plan: an individual opens it directly with a financial institution and decides how the money inside it is invested, commonly through mutual funds or other securities offered by that vendor. The tax benefit is what distinguishes it from an ordinary brokerage account: money inside an IRA grows either tax-deferred or tax-free, depending on the type, until it's withdrawn according to the account's rules. The SEC does not regulate or oversee IRAs themselves; the tax rules that govern them come from the Internal Revenue Code and IRS guidance. A person can hold more than one type of retirement account at a time, for example a workplace 401(k) alongside an IRA, and many people do.
Traditional versus Roth IRAs
The two most common IRAs sit on opposite sides of the tax timeline. With a traditional IRA, contributions are typically tax-deductible in the year they're made, the money then grows without being taxed year to year, and withdrawals in retirement are taxed as ordinary income. With a Roth IRA, it works the other way: contributions are made with after-tax money and aren't deductible, but qualified withdrawals of both contributions and earnings in retirement are generally tax-free. Whether a person is better off contributing to one or the other depends on factors like current versus expected future tax rates, and how much they can deduct from a traditional IRA depends on income and whether they or a spouse are covered by a retirement plan at work. The exact contribution limits, income phase-outs for Roth eligibility, and deduction limits for traditional IRAs change periodically and are published by the IRS.
SEP and SIMPLE IRAs for the self-employed and small businesses
Two other IRA types exist mainly for small-business owners and the self-employed rather than individual retirement savers acting alone. A SEP IRA lets an employer, often a small business or a self-employed person, make contributions to a traditional IRA that's established in each employee's name. A SIMPLE IRA is designed for small businesses that don't offer another retirement plan; it permits both employer and employee contributions with simpler administration and generally lower contribution limits than a 401(k). Both remain, at their core, traditional IRAs, so distributions from them are taxed the same way ordinary traditional IRA withdrawals are once the money comes out.
Required minimum distributions
Traditional IRAs (along with SEP and SIMPLE IRAs) don't let money sit untouched forever. Once the account owner reaches the applicable age, currently 73 for the Required Minimum Distribution Calculator's purposes, they generally must begin taking required minimum distributions, or RMDs, calculated from the account's prior year-end balance and the owner's age. If a spouse who's the sole beneficiary is more than 10 years younger, a different calculation applies, and the IRS's Publication 590-B covers that and other RMD details, while the IRS RMD FAQ and the comparison chart of IRA versus defined-contribution-plan RMD rules lay out the broader framework. Roth IRAs are generally not subject to RMDs during the original owner's lifetime, which is one reason some savers prefer them for long-term estate planning, though the specific rules should be confirmed with the IRS before relying on them.
Choosing where to open one, and watching for fraud
Because an IRA is opened with a vendor of the account holder's choosing, shopping around matters: different institutions offer different investment menus, fees, and account features. Some IRAs are self-directed, meaning the owner can hold a wider range of assets beyond typical mutual funds and stocks; the SEC has specifically warned that self-directed IRAs carry elevated fraud risk because custodians of these accounts aren't required to vet the investments placed inside them, so a legitimate-looking IRA custodian doesn't mean the underlying investment has been checked for legitimacy. Anyone opening or funding an IRA, especially a self-directed one, should independently verify any investment and the people selling it before moving money.
Getting started
The practical starting point is the IRS's Individual Retirement Arrangements (IRAs) page, which carries the current-year contribution limits, income phase-outs, and deduction rules that determine exactly how much a given person can put in and how it will be taxed. From there, opening an account is a matter of choosing a bank or brokerage vendor, completing that institution's IRA application, and setting a contribution amount and investment selections; a tax professional can help sort out which IRA type and contribution level fit a specific income situation before money goes in.