Traditional IRAs

Traditional IRAs offer you the ability to put away up to $2,000 in your retirement account and get a tax deduction.

Traditional IRAs have been around for a long time. They offer you the ability to put away up to $2,000 in your retirement account and get a tax deduction. If you have earned income and, your employer does not offer a retirement plan or you are not eligible to participate in a plan if there is one, you can make a tax-deductible contribution of up to $2,000 to your IRA. If you only earn $1,500 during a year, you can actually contribute $1,500 to your IRA for the year.

For 2001, if you or your spouse is an active participant in an employer-sponsored retirement plan and you still want to contribute more to your retirement savings, you can also use a deduction IRA. There are income limits, however, if you are single and your adjusted gross income (AGI) is less than $33,000, you're golden and can deduct the deduction is phased out. If you're married filing jointly, the limit is phased out between $53,000 and $63,000 of your AGI.

Rollover IRAs

Rollover IRA is set up to receive distributions from qualified retirement plans such as your 401(k) or a 403(b) plan.

This IRA is set up to receive distributions from qualified retirement plans such as your 401(k) or a 403(b) plan. If you are in between jobs, it can become a holding tank for your 401(k) money until you decide if you wan to transfer the money into your new employer's plan.

There is no time limit on money held in a rollover IRA. If your new employer does not allow transfers, no sweat! if you change jobs again  and the newest employer allows transfers, you can roll it then. Do not commingle any for your other IRA funds with your rollover IRA because you sill lose the ability to transfer it back into a 401(k).