Types of IRA as an employee

Type	Eligibility	Max Contribution	Taxes	Penalties for Withdrawal?
Traditional IRA	Anyone under age 70½	For 2012: Up to $5,000 ($6,000 if you're 50+). Can't be more than your annual income	If you have an employer-sponsored plan: If you make less than $58,000, you can deduct the full amount you contribute. If you make between $58,000 and $68,000, part of your contribution is tax-deductible. (For this reason, people earning less than $68,000 will have what are called deductible IRAs.) If you make more than $68,000, your contributions are not tax-deductible at all (and your IRA will be called a non-deductible IRA). If you don't have an employer-sponsored plan: Contributions are fully deductible regardless of income. For all traditional IRAs: You aren't taxed on earnings until you withdraw from the account.	10% federal penalty tax on withdrawals before age 59½ unless for your first home (up to $10,000); for higher education expenses for you or anyone in your family; for disability; or for death
Roth IRA	Anyone with income under an amount defined by the IRS	For 2012: Depending on your income (see link to the left), up to $5,000 ($6,000 if you're 50+). Can't be more than your annual income	Contributions are nondeductibleTo deduct means to subtract that amount from your taxable income at the end of the year so that you pay less in taxes. So if you deduct $5,000 and you're in the 20% tax bracket, you'll pay $1,000 less in taxes.. Distributions from contributions are tax-free. Distributions from earnings are federally tax-free once you've had the Roth open for 5 years and you're over age 59½.	Withdrawals of contributions are penalty-free. Withdrawals of earnings before age 59½ are penalized unless for your first home (up to $10,000); higher education expenses for you or anyone in your family; disability; or death.
Simplified Employee Pension (SEP-IRA)	Anyone who is self-employed, has freelance income or is a business owner under age 70½	For 2012: Up to $40,000 or 25% of an employee's annual compensation. You must have earned income equal to or greater than your contribution.	If you already have an employer-sponsored plan, how much you can deduct depends on your income. If you don't, contributions are fully deductible regardless of income. You aren't taxed on earnings until you withdraw.	10% federal penalty tax on withdrawals before age 59½ unless for your first home (up to $10,000); higher education expenses for you or anyone in your family; disability; or death
Savings Incentive Matching Plan for Employers IRA (SIMPLE -IRA)	Employers with 100 employees or fewer who do not maintain any other retirement plan, or any self-employed person who does not maintain another retirement plan	For 2012: Up to $11,500 a year ($14,000 if age 50 or older); employers will match a portion of the employee's contribution	Contributions are tax deductible. Earnings are not taxed until distribution.	Withdrawals of contributions are penalty-free. Withdrawals of earnings before age 59½ are penalized unless for your first home (up to $10,000); higher education expenses for you or anyone in your family; disability; or death.
Spousal IRA	A married person who has an annual income of less than $3,000, who is filing her taxes jointly with her partner	For 2012: Up to $5,000 ($6,000 if age 50 or older), as long as the working spouse has enough earned income to cover the contribution	The same rules apply as with a Traditional or Roth IRA, depending on which kind has been set up.	The same rules apply as with a Traditional or Roth IRA, depending on which kind has been set up.
Rollover or Conduit IRA	Anyone who wants to roll over her 401(k) or other retirement plan from a former job	No limit on the contributions transferred to a rollover IRA. Can be transferred to a new employer's qualified retirement plan	Contributions and earnings are not taxed unless they are co-mingled with other assets.	10% federal penalty tax on withdrawals before age 59½ unless for your first home (up to $10,000); higher education expenses for you or anyone in your family; disability; or death