This booklet provides an overview of the various types of IRAs and how you might use them to build financial freedom. It is not intended to give specific tax advice. You should consult your tax professional regarding your own individual situation. Depending upon your circumstances, you might elect to set up any of the following four Individual Retirement Arrangements:

Traditional IRAs are funded with tax-deductible contributions. Contributions will be deducted yearly and will not be taxed on the money invested—or the gains on that money—until you withdraw the funds, usually at retirement. If you withdraw funds before age 591⁄2, a 10 percent tax penalty may apply. Withdrawals will be taxed as ordinary income.

Roth IRA contributions are made with after-tax dollars, meaning you cannot deduct them from taxable income. Withdrawals are generally free of income tax, provided you withdraw IRA funds after you are age 591⁄2 and meet certain other conditions.

Spousal IRA contributions can be made for a spouse who does not work.

Education IRA contributions made with after-tax dollars will grow tax-free in an education savings account for an under-18 beneficiary.

IRA-Based Retirement Plans. In addition to IRA plans that an individual might set up, some employers may have established IRA-based retirement plans for employees. Employer contributions to these plans enhance retirement savings at no cost to the employee. IRA-based retirement plans offered by some employers include the Simplified Employee Pension plan (SEP-IRA) and the Savings Incentive Match Plan for Employees (SIMPLE IRA).