A Roth IRA is a tax-favored account that allows anyone -regardless of age- with earned income to contribute up to $4,000 annually. If you have a spouse and your joint income is within the allowable range, you can open separate Roth IRAs and contribute up to $4,000 each, even if your spouse has no earned income. (However, your combined earned income must be at least $8,000.)

The maximum Roth IRA contribution is phased out for those with adjusted gross income between $95,000 - $110,000 (single) and $150,000 - $160,000 (joint). Contributions are not tax-deductible, but can be withdrawn tax-free at any time. Earnings grow tax-deferred and can be withdrawn tax-free if your account has been open at least 5 years, and if you are over age 59-1/2, disabled, or using up to $10,000 to buy a first home. Earnings which are withdrawn without meeting these qualifications are subject to income tax and a 10% penalty.