If you don't have a 401(k) at work or you've maxed it out (good for you!) and you're looking for tax-deferred investments options consider an IRA. IRAs are individual retirement accounts that offer deferrals on taxes to encourage people to invest more. You can contribute money to an IRA and defer paying tax on any earnings until you start making withdrawals. Of course, there are rules about what you can put in and what you can take out. For 2005, the maximum contribution is to your IRA is $4,000 a year, with folks 50 and over allowed an additional $500 catch-up contribution. On the other end, you must be at least 59-and-a-half to start withdrawing money from your account without owing a 10% early-withdrawal penalty (you may qualify for an exemption from the penalty under some circumstances). Know that you must start taking withdrawals by age 70-and-a-half if you hadn't started to do so beforehand. All earnings are taxed at your current rate upon withdrawal. Roth IRAs work a little differently; the contributions aren't deductible, but the full withdrawals are tax-free once you reach age 59-and-a-half. And, there aren't any required withdrawals with Roth IRAs. You can leave the money in the account and pass it on to your heirs. But with Roth IRAs, you can only participate if you make less than a certain amount ($95,000 if you're single, or $150,000 if you are married and file jointly). Deciding what kind of IRA is right for you is an important decision. But whichever way you go, IRAs are a tremendous resource for anybody who's interesting in saving money and saving on taxes.
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