There are several variations on the central theme, but in general they are available to anyone under 70 . Since IRAs are specifically intended for retirement, withdrawals are subject to penalties if taken before age 59 . Maximum annual contributions vary, but, in general, these are tax-deductible in the year in which they were applied to the account. In most cases, you contribute pretax money, meaning you also reduce your current taxable income. The contributions you make to your IRA grow tax-deferred, which means you don't pay any taxes until you withdraw funds.
Contributions are also tax-deductible in most cases.
The Roth IRA offers federally tax-free growth, which means you pay no taxes at all on earnings if you withdraw after age 59 and have had the account for more than five years. Unlike a traditional IRA, you do have to pay taxes on the money you contribute. Remember though, you don't have to pay taxes on the money you earn on your investments once you've retired. This is considered a particularly good option for younger workers. Simplified Employee Pension IRAs are designed for sole proprietors and those with any self-employment income.