The federal government allows wage earners younger than 701&Mac218;2 years old to deposit $2,000 in a special account known as an IRA. IRA's can be invested in instruments such as stocks, CDs, mutual funds, bonds, or government securities. These monies may be eligible (there are restrictions based on wage and marital status) for deduction from gross income for income tax purposes. The primary advantage of IRA's is that contributions, interest, dividends, and capital gains are tax-deferred until money is withdrawn on retirement. The recently introduced Roth IRA is not tax deferred, however, withdrawals are considered non-taxable income.

A self-directed, tax-deferred retirement plan, in which gainfully employed persons may contribute annually up to $2,000 for an individual or $2,250 for an individual and non-working spouse.

A tax-deferred product offered by banks, mutual funds and other companies. Under current law, a married couple can put $4,000 ($2,000 each) into their own IRA each year in a wide range of savings accounts and investments. Earnings are tax-deferred until you begin withdrawing the money (which you can start doing without penalty after age 59 ?). Under current tax law, some people (depending on their income, marital status or other factors) can deduct all or part of their IRA contributions, which reduces their taxes.