Have you already paid off your credit card debt and created your emergency fund? If so, another use for your tax refund can be to give your retirement savings a jump start.

Trying to decide between a Roth or Traditional IRA? Consider the differences between the two and decide what works best for you. Whether you choose a Roth or Traditional IRA, you're allowed to make up to a $4,000 contribution ($5,000 if you are 50 or older) for the 2007 tax year.

What is the difference between a Roth IRA and a deductible traditional IRA?
The main difference between the two is that in a traditional IRA, you can deduct contributions from your income in the year you make the contribution. Say you made $40,000 in 2007 and you make a $2000 contribution to a traditional IRA. You can deduct your contribution from your income and your income taxes will be based on $38,000 instead of $40,000. At 59 1/2, you may withdraw funds from your account but you will be forced to pay taxes on all capital gains, interest and dividends that were earned over the years. If you chose to open a Roth IRA with your $2000, you would not receive the income tax deduction. If you needed money from the account, you can withdraw your principal at any time without penalty. If you withdraw any of the earnings from the account, you will be subject to a 10% penalty. When you reach retirement age, you are able to withdraw 100% of your account without penalty. Not everyone qualifies for the Roth IRA due to income limitations. A single person cannot make over $95,000; married couples cannot make over $150,000.

Looking for a place to open your IRA? Consider Zecco.com for free trades and no minimum balance. You may also consider TradeKing. No minimums and no catches. They will also reimburse you up to $150 for transferring your account to TradeKing.
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