Individuals can choose from the Roth IRA as well as Traditional IRAs. If you are a business owner you may choose to open a Simplified Employee Pension (SEP) or a SIMPLE IRA. Each of these options offer potential tax benefits, but in different ways.
There are two types of "Traditional IRAs" - Contributory IRAs and Rollover IRAs.
A Contributory IRA is used to personally set aside funds for retirement. For many taxpayers, annual amounts contributed to this type of IRA are deductible on an individual's tax return. Tax deductibility depends on an individual's participation status in an employer's retirement plan and adjusted gross income (AGI). Interest earnings are tax deferred until withdrawn.
Rollover IRAs are established to shelter from taxation money distributed from an employer's qualified retirement plan. Interest earnings are tax deferred until withdrawn.