Even if you are saving for retirement in your employer's plan, you can create your own personal pension plan through contributions to an IRA. Get started with a quick overview of the rules and potential benefits of a traditional IRA and a Roth IRA.

Traditional IRA
A traditional IRA can give you an up-front tax deduction and is always tax deferred.

	Eligibility includes anyone with an earned income.
	Any earnings on the money you contribute grow tax-deferred.
	The current contribution limit is $5,000 a year ($6,000 over age 50).
	Contributions may be tax deductible if your employer does not offer a retirement savings plan or if you meet other eligibility requirements.
	Withdrawals prior to age 59½ may trigger a 10% penalty tax. At age 70½, you'll be required to withdraw a minimum amount each year from your IRA, based on an IRS formula. If you miss a withdrawal, you could be subject to a substantial penalty.
	A direct rollover of assets from an employer-sponsored plan is allowed.

Roth IRA
A Roth IRA offers a different approach to tax savings: You can't deduct your contributions, but you can look forward to a lifetime of tax-exempt growth and tax-exempt withdrawals if you meet the Roth requirements.

	Historically limited to individuals with an adjusted gross income of $100,000 or less (no longer applies in 2010).
	After-tax contributions offer tax-exempt growth and tax-exempt withdrawals.
	Contribution limit is $5,000 a year ($6,000 over age 50).
	No required minimum distributions.
	Contributions may continue to be made, even after owner reaches age 70½.
	Withdrawals prior to age 59½ may trigger a 10% penalty tax.
	A direct rollover of assets from an employer-sponsored plan is not allowed.

2010 changes to Roth rules could cause you to consider converting your traditional IRA assets to a Roth IRA. Want more information? Visit our Roth IRA Center for more details.