Traditional IRA:
An individual retirement account that allows individuals to contribute pretax money to investments. The investments grow tax-deferred until the amounts are withdrawn at retirement, generally age 59 1/2. The maximum amount you can contribute for 2015 is the lesser of your taxable compensation or $5,500 ($6,500 if you are 50 or older). There are phase-outs for tax deductible contributions if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels.
An individual retirement account that allows individuals to contribute after-tax money to investments. The investments grow tax free and there are no taxes when withdrawn at retirement, generally age 59 ½. The maximum amount you can contribute for 2015 is the lesser of your taxable compensation or $5,500 ($6,500 if you are 50 or older). The eligibility to contribute starts to phase-out once your modified adjusted gross income reaches $183,000 if your filing status is married filing jointly and $116,000 if single or head of household.