Non-Working Spouse

• Non-working parents may be able to contribute to an IRA.father and son. image by Harvey Hudson from Fotolia.com
  
  When only one marriage partner is earning an income and contributes to an employer-based retirement, up to $5,000 can be contributed to an Individual Retirement Account for the unemployed spouse as of 2010. This is for couples whose adjusted gross income (AGI) does not exceed $167,000 on a joint tax return. If the non-earning spouse is over 50 years of age, the contribution maximum increases to $6,000. If the neither spouse contributes to a retirement plan, then the maximum IRA contribution is $10,000, or $5,000 each, and there is no limit on adjusted gross income (AGI).
  
  

Traditional IRA

• Traditional IRAs defer taxes until retirement.tax forms image by Chad McDermott from Fotolia.com
  
  A traditional IRA is a tax-deferred retirement account. Make contributions up to age 70-1/2 and accrue gains without being taxed. Withdrawals can be made after age 59-1/2 and must be made after 70-1/2. If money is withdrawn before age 59-1/2, penalties will apply. All money withdrawn is taxed as income. The benefit of a traditional IRA is that it is deducted on your tax return, lowering your taxable income and deferring the payment of taxes until retirement.
  
  

Roth IRAs

• Roth IRAs provide tax-free retirement income.dollars image by peter Hires Images from Fotolia.com
  
  Roth IRAs turn a traditional IRA on its head. Instead of waiting to pay taxes on withdrawals, Roth IRA contributions are taxed immediately. Contributions are not deducted from your tax return as with a traditional IRA. Instead taxes are paid, the money grows tax-free and the withdrawals made in retirement will also be tax-free.
  
  

Tax Considerations

• Paying taxes now or later depends on the IRA you choose.tax defined image by Christopher Walker from Fotolia.com
  
  Take income taxes into consideration when deciding between a traditional IRA or Roth IRA . If you have a higher income now than you expect in retirement, then the traditional IRA might be the right choice. If the reverse is true, consider a Roth IRA. However, also consider how tax rates and/or income may change in the future. If paying the taxes upfront does not pose a financial hardship right now, it may be worth it to allow for tax-free income in the future.
  
  

Investment Options

• Investment options can be conservative or aggressive.barbie street image by Roques Jean Chris from Fotolia.com
  
  The investment options within your IRA are the same whether you choose a traditional IRA or a Roth IRA. Conservative investments such as certificates of deposit (CDs) are very low risk, but returns will be slow and steady. If you have a longer time to invest, or a higher tolerance for risk, consider the purchase of stocks, exchange trade funds (ETFs) and/or mutual funds. Financial advisers can assist you in determining your investment style and recommend the types of investments that fit your personal needs.