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IRA/Keogh Accounts

A personal savings plan that gives tax advantages for setting aside money for retirement, known as individaul retirement accounts. For a Traditional IRA, the maximum contribution for 2005 is $4,000 or the amount of taxable compensation for one year. Accounts may be established for those younger than 70 1/2 before the end of the year. Tax-free withdrawals can be made after the age 59 1/2; otherwise a 10 percent tax may apply, unless the withdrawal is made prior to the due date for filing taxes of the year the contributions were made. Other forms of IRAs include the Roth IRA, which is funded with nondeductible contributions and imposes a salary cap, and the Simple IRA, a plan for employees of companies with fewer than 100 workers.

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