The Traditional IRA is the IRA that allows you to contribute pre-tax dollars if your income limits qualify. Both you and your spouse, whether the spouse is earning a paycheck or not, may contribute up to $2,000 per year for a total of $4,000. Earnings accumulate tax-free until you begin withdrawing the funds. There are limits to your contributions based upon your income and whether you are already covered by a pension plan. The penalties for early withdrawals from this account are waived if the money is used to pay for higher education expenses or for a first-time home purchase.

IRA contributions are limited to $4,000 for 2005 and 2006 with a “Catch Up” provision of an additional $500 in 2005 and $1,000 in 2006 for contributors aged 50 or over.