A Roth IRA is funded with your after-tax dollars but your earnings and withdrawals are tax-free. This can translate to big tax savings in the future.

Contributions to a Traditional IRA are tax-deductible up to certain income limits. You may pay less in taxes in the years you contribute but will pay tax when you start making withdrawals.

This is a good option for those who expect to have a higher tax rate when they begin making withdrawals vs. when they contribute.

This is a good option for those who expect to have a lower tax rate when they begin making withdrawals vs. when they contribute.

Up to $5,000 of earned income plus an additional $1,000 starting at age 50. This amount is the total allowable contribution you can make to both Traditional and Roth IRA plans.

Up to $5,000 of earned income plus an additional $1,000 starting at age 50. This amount is the total allowable contribution you can make to both Traditional and Roth IRA plans.

Beginning in 2010, the modified AGI and filing status requirements for converting a traditional IRA to a Roth IRA are eliminated. Also, for any 2010 rollover from an IRA other than a Roth IRA to a Roth IRA, any amounts that would be included as income will be included in income in equal amounts in 2011 and 2012. You can choose to include the entire amount in income in 2010.

Roth IRA Income Limits

Anyone with taxable earned income can participate up to the age of 70½; however there are income limits for tax-deductible contributions.

Traditional IRA Income Limits

You can withdraw your contributions without penalty at any time. You can begin making penalty-free withdrawals of earnings if you are at age 59½ and if your account has been open for at least 5 years.

You can begin making penalty-free withdrawals at age 59½ and you must begin taking distributions by age 70½.