Traditional IRAs

• Traditional IRAs can be opened and contributed to as long as you are under age 70 1/2 regardless of how much money you make. Traditional IRAs offer tax benefits while the money is in the account and when the money is contributed. If you meet certain income requirements, you can deduct the contributions to your traditional IRA from your taxable income. The money then grows tax free in the account. When you withdraw the money, it will be taxed as income. If you expect your tax bracket to be lower at retirement than it is now, this is usually a good investment.
  
  

Roth IRAs

• There is no age restriction on who can have a Roth IRA, but there are income restrictions that are adjusted annually. For 2009, if you are single, your adjusted gross income cannot be more than $105,000, if you are married and filing separately, your adjusted gross income cannot be more than $10,000 and if you are married filing jointly, your adjusted gross income cannot exceed $176,000. Roth IRAs do not allow you to deduct contributions from your taxes. Instead, after the money has grown tax free in the account, it comes out tax free at retirement. Roth IRAs are good investments for people who expect to be in a higher tax bracket at retirement than they are now.
  
  

SIMPLE IRAs

• A SIMPLE IRA is a retirement plan used by small companies to contribute to their employees' retirement. Only employers with 100 or fewer employees are eligible. For the purpose of SIMPLE IRA eligibility, an employee is anyone who earned at least $5,000 during the year. Employees may contribute up to $11,500 in pre-tax dollars for 2009. Employees who are 50 or older, may contribute an extra $2,500.
  
  

SEP IRAs

• SEP stands for simplified employee pension and is an option for sole proprietors or those in a partnership who have self-employment income. For 2009, the maximum contribution to a SEP IRA is 25 percent of your income up to $49,000. The contributions are deducted from your pay by your employer, who then makes the contributions to the account. The money grows tax free until retirement. Small businesses using SEP IRAs must contribute the same percentage of compensation for each employee.
  
  

Spousal IRAs

• If you are married and file a joint return, you can use your spouse's income to make yourself eligible to contribute to a traditional or Roth IRA. Usually, you must have taxable income at least equal to your contribution. For a spouse IRA, your contribution limit is equal to the smaller of $5,000 if your are under age 50, $6,000 if you are 50 or older, or your spouse's taxable income minus contributions made to her traditional or Roth accounts.