Retirement is a time to relax and enjoy the rewards of your many years of hard work. With a little planning and some smart investments, you can ensure that your golden years are truly golden.

IRA Savings versus IRA Certificates—Each of the IRAs below can be invested in either an IRA Savings Account or an IRA Certificate. With a certificate, you commit your money for the period of time stated on the certificate, and in return, you earn a higher dividend rate. Savings accounts, which earn slightly lower rates of return, are a little more flexible when it comes to making contributions or withdrawals.


The benefits of a Traditional IRA:

• Annual contributions are potentially tax deductible.
• Earnings are tax deferred until the funds are withdrawn from the IRA plan.
• Withdrawals can be made without penalty once you reach the age of 59 1/2 years of age. You must begin withdrawing from your account when you reach the age of 70 1/2.
• Other withdrawal reasons may also be penalty-free, such as first time home buying, disability, or higher education.

With a Traditional IRA, the maximum contribution for 2008 is the lesser of the following: 100% of your eligible compensation, or $5,000 (you may make a catch-up contribution of $6,000 if you are 50 or older). Starting in 2009, the dollar limit for contributions will be indexed for inflation in $500 increments. Contributions to a traditional IRA reduce your contribution limit to a Roth IRA and vice versa.


The benefits of a Roth IRA:

• Money in a Roth IRA grows tax-deferred until you need it for retirement. Roth IRA contributions are not tax deductible.
• You may withdraw contributed funds at any time without incurring a tax penalty.
• Unlike a traditional IRA, you can continue contributing to a Roth IRA even if you have reached the age of
  70 1/2.

Providing you qualify for a Roth IRA under the Adjusted Gross Income (AGI) limits established by the IRS, you can contribute up to $5,000 per person into a Roth IRA each year if you're under age 50, or $6,000 if you're over age 50.

While not really IRAs in the traditional sense, Education IRAs are really useful, allowing you to contribute up to $2,000 per child per year (subject to some income limitations). The money goes into a custodial account for benefit of the child to pay his/her qualifying education expenses.

Also, you can now use an Education IRA to pay for any kind of education, public or private, grade school, high school or college. It can be used to pay for virtually any education-related expense: tuition, fees, books, supplies, room and board and school uniforms.