What is a contribution in terms of an IRA?

A contribution, in terms of an Individual Retirement Account (IRA), specifically refers to the act of putting money into the account for the purpose of saving for retirement. This money is generally invested within the IRA to grow tax-deferred, which means that taxes on the gains made within the account are typically postponed until the money is withdrawn, often during retirement when the individual may be in a lower tax bracket.

When considering the other options, the first option describes a withdrawal, which is the opposite of a contribution and involves taking money out of the IRA. The second option suggests a general investment in stocks, which does not specifically connect to an IRA contribution since it does not necessarily imply that the investment is being made into an IRA. The fourth option refers to transferring funds between retirement accounts, which is a different process from making a direct contribution to an IRA.

Overall, making a contribution directly increases the balance of an IRA and is a crucial step in planning for future financial security during retirement.