Because money in the plan grows free from the clutches of Uncle Sam. That is, the income from interest, dividends and capital gains can compound each year without taxes nipping away at it.
In addition, you also can escape taxes on either the money you put into the plan initially or on the money you withdraw in retirement, depending upon whether you choose a traditional or Roth IRA.
So what's the catch? The government limits the amount of money you can put into an IRA each year. Most people under 50 can contribute no more than $5,500 a year; that limit rises if you're older. For more details, see How much should I put into an IRA?.
