Roth IRAs carry many of the same rules as traditional IRAs, except that contributions are never deductible and withdrawals after age 59½ are never taxable. Also, you don't have to start making withdrawals from your Roth when you reach age 70½.

The Tax Advantage

The tax-free growth in Roth accounts makes them very appealing to anyone who qualifies for them. You can contribute to a Roth IRA only if your income falls below a certain threshold. For example, in 2008 your income must fall below $95,000 if you're single or $150,000 if you're married to be allowed the full Roth contribution. Check www.irs.gov for updates on these limitations.

Roth IRA Conversions

Since Roth IRA withdrawals in retirement aren't taxable, they are a great tax planning tool. If your income is less than $100,000, then you can convert all or part of your traditional IRA to a Roth account. You'll pay income taxes on the amount you convert, but if you're in your 40s and have twenty or more years until you want to retire, the future tax-free growth of the account could be very beneficial.

Roth Employer Plans

Many companies now have Roth options added to their employer retirement plans. These Roth 401(k) or Roth 403(b) accounts don't carry the income limitations that personal Roth IRAs do, so any employee can contribute through her paycheck. The same contribution limits of employer accounts apply to the Roth and non-Roth part of the plan, combined. For example, if you're eligible to contribute up to $21,000 to your employer plan, you can contribute all or part to the Roth part of the plan. If you contribute $15,000 to the Roth part of the plan, that amount isn't deductible. The remaining $6,000 that you contribute to the regular retirement plan will be deductible — or you may hear the deposit referred to as pretax.