A more thorough explanation:

Individual retirement accounts (IRA) are personal retirement accounts that offer tax benefits to employees. Unlike employer-sponsored 401k plans, IRAs can be created at many banks and investment companies with a variety of investment options. Employees can contribute up to a certain amount each year set by the Internal Revenue Service (IRS) that does not incur taxes until the person withdraws the money from the account.

• John contributes $6,000 to his IRA account in 2022. He will not have to pay taxes on this money until he withdraws it from the account.
• Jane is 55 years old and wants to retire at 60. She starts contributing $1,000 extra each year to her IRA account to catch up on her retirement savings.
• Mike has an employer-sponsored 401k plan and contributes $10,000 to it each year. He is not able to deduct contributions to his IRA because he already has a retirement plan through his employer.

These examples illustrate how IRAs work and the different rules that apply to them. John's contribution to his IRA will not be taxed until he withdraws it, which is a benefit of having an IRA. Jane is taking advantage of the catch-up contribution option available to individuals over 50 years old. Mike is not able to deduct contributions to his IRA because he already has a retirement plan through his employer.

It is important to note that there are different types of IRAs, such as Roth IRAs, which operate differently than traditional IRAs. Roth IRAs do not offer tax deductions for contributions, but withdrawals are tax-free upon retirement. Additionally, there are income limitations for contributing to a Roth IRA.