Should I Set Up a Traditional IRA?
Traditional IRAs offer tax-deferred earning and deductions. With a traditional IRA, annual contributions may be tax-deductible and earnings grow tax-deferred until withdrawn. You can also open a second traditional IRA for a non-working spouse and potentially double your decution. Plus, traditional IRAs permit a $10,000 penalty-free withdrawal for first-time homebuyers. There is no annual contribution requirement, but there are limits on how much you can contribute per year. The chart below shows the annual contribution limits for 2006:

Individual Under the age of 50	Individual Age 50 and older*	Married (both) Under the age of 50	Married (both) Age 50 and older*
$4,000	$5,000	$8,000	$10,000

*Individuals who attain the age of 50 before the close of the taxable year may contribute an amount in excess of the basic annual contribution.

There are income limits for taking a deduction. A 10% tax penalty may be levied on early withdrawals (before the age of 59 ½). Tony Lopez can help you determine whether to opt for a traditional or a Roth IRA.

If you are a single filer and your adjusted gross income is under $50,000, you may take the full annual deduction. However eligibility gradually phases out for single filers with adjusted gross incomes between $50,000 and $60,000 (between $70,000 and $80,000 for joint filers). If you are a single filer with an adjusted gross income above $60,000 or a joint filer with an adjusted gross income above $80,000, you may not make tax-deductible contributions to a traditional IRA.

The Internal Revenue Service (IRS) provides guidance on deducting IRA contributions and how to report non-deductible contributions. See IRS publication 590 at the IRS forms and publications web site or call 1-800-TAX-FORM to request a copy.