What They Are IRAs are retirement plans for individuals that are easy to set up. When to Contribute IRAs , or Individual Retirement Accounts , are tax-deferred, personal retirement plans. But all IRAs are not alike. There are two types of traditional IRAs, deductible and nondeductible, and the Roth IRA, which was introduced in 1998.
All traditional IRAs are tax deferred .
That means you owe no tax on your earnings until you withdraw. Roth IRAs are tax free if you follow the rules for withdrawal That means you owe no tax at all on your earnings as they accumulate or when you withdraw. Any amount you earn qualifies, and you can contribute as much as you want, up to the cap. But you can't contribute more than you earn. The advantage for the nonworking partner is being able to build an individual retirement fund.