Annual contributions of $5,000 can be made or 100 percent of your earned income, whichever is less. Your earnings are tax deferred but will be taxed upon withdrawal.

Withdrawals are penalty-free** after age 59 ½, for the purchase of a first home, higher education or upon death. There is a required distribution at age 70 ½.

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* Traditional IRA contibutors receive a 100% deduction on their annual contribution if they are not an active participant under an employer's retirement plan, or during 2002, earn no more than $54,000 if married and filing jointly, $34,000 if filing singly. These amounts continue to increase through 2007 and 2005, respectively. For those who are participants in an employer plan, Traditional IRA deductibility is gradually phased out above these income levels.

** Taxable distributions are not subject to the 10 percent early withdrawal penalty if the individual is 591/2, deceased, disabled, taking equal periodic payments over his/her life expectancy for at least five years or until age 59 1/2, whichever comes later, or for college expenses, first-time home purchase up to $10,000, certain medical expenses and certain other uses.

Other types of IRA accounts
IRA comparison chart
Roth IRA
Coverdell Education Savings Accounts
Traditional IRA - Non-Deductible