Compared with the good old days of full deductibility, the individual retirement account, even with the addition of the tax-free Roth IRA, has fallen off many people's scopes.

Gone are the pages of newspapers and magazines packed with ads urging taxpayers to hustle to their bank, mutual fund or brokerage and get their write-off.

The growth of 401(k) and similar plans, day trading, index funds and a host of other hot investment ideas has made the IRA seem old hat. And the explosion in related savings vehicles, such as the $500-a-year education IRAs, along with lots of new rules about when you can tap into an IRA, has sowed so much confusion among the public that some savers are just throwing up their hands, according to some financial planners.

But while IRAs may have been forgotten by many people, they are not gone, and they remain a useful device for retirement saving. The Roth IRA, particularly, offers many appealing features for thrifty workers who expect to be in relatively high tax brackets in retirement and are looking for uncomplicated income for their later years.

It's now possible for most married couples to put up to $4,000 into an IRA each year, and though restrictions make it tough for many middle-income people to get a deduction, Roth IRAs are available to couples making up to $150,000 and partly available to those making up to $160,000 a year. Setting aside $4,000 a year for 30 or 40 years and then being able to withdraw it all tax-free is no small advantage.

Such time frames are more available than you might think, because with a Roth, unlike a traditional IRA, savers aren't required to stop contributions when they reach 70. And unlike a traditional IRA, Roth IRAs do not require holders to begin taking distributions at age 70 1/2.

"IRAs are very, very important tools to be using," said planner Thomas C. Grzymala of Alexandria Financial Associates. And he noted that Roth IRAs can be used in estate planning as well, since there is no income tax to be paid and they can be set up to provide a child or even a grandchild with a lifetime stream of tax-free income.

Both Roth and traditional IRAs allow workers to contribute up to $2,000 a year ($4,000 for a married couple), but the tax treatment differs.

Roth is simple: no deduction now, no taxes when the money is withdrawn in retirement.

Contributions to traditional IRAs are fully deductible for workers who are not covered by a retirement plan at work, and the money is taxed at ordinary income rates when withdrawn in retirement.

Workers covered by a retirement plan at work get a full deduction if they earn less than $30,000 a year and a partial deduction if their income is less than $40,000. A married worker gets a full deduction if income is less than $50,000 and a partial deduction if it is less than $60,000. A married worker who is not covered by an employer plan but whose spouse is covered can take a full deduction if income is less than $150,000 and a partial deduction if income is less than $160,000.

In the early 1980s, before income limits were imposed by the 1986 Tax Reform Act, anyone with earned income could make a tax-deductible contribution to an IRA, and the plans were marketed aggressively by financial firms.

Many financial planners still urge clients to make room for an IRA in their financial strategies. They don't, of course, suggest substituting an IRA for a vehicle likely to do better, but since most retirement savings devices come with limitations, an IRA can fill a gap.

For example, if you have a 401(k) plan with an employer match, begin by making sure you contribute enough to get the full matching amount. That's free money.

Once you've maxed out the match, you can continue to add to your 401(k) up to a maximum of $10,000 a year.

Since that comes out of pretax income, you get a tax saving on your contributions but must pay tax at ordinary income rates when you withdraw it in retirement. Taxes, though, aren't such a problem if your retirement income is likely to be modest.

If you're worried about taxes later on, however, some suggest reassessing after you have maxed out the match and putting the next $2,000 (or $4,000 if you're married) into a Roth IRA. There's no deduction, but there's also no tax at the end. Also, IRA accounts can be invested in a wide range of things, which for some people is an advantage over their 401(k) plan.

There are advantages either way, so try to figure which suits you best. "The important thing is don't leave any [employer match] money on the table," Grzymala said.

If you still have money to tuck away after that, you can consider adding more to your 401(k).

Alternatively, or as yet another addition, you can consider an index mutual fund. These funds, because they trade only when a stock enters or leaves the index, tend to be tax-efficient, and when you sell, profits on increased share prices are entitled to lower capital-gains rates, assuming you have held the shares for at least a year.

The deadline for IRA contributions for 1999 is the due date of your tax return--next April for most folks--but the earlier you make your contribution, the longer the money has to grow. And of course you can make your 2000 contribution any time after Jan. 1.

If you make a contribution between January and April, make sure you specify the year you intend it to be for. If you don't, the fund or other trustee will likely assume it's for 2000.

The investment flexibility of IRAs is one of their appeals, but it is also a pitfall. One surprisingly common error is to put a tax-favored investment, such as municipal bonds or a tax-deferred annuity, inside an IRA. With such investments you are already paying for the tax benefits--in the form of lower interest rates on munis or fees on an annuity--so that's wasted in an IRA, which conveys its tax benefits to everything inside it.

Choosing an IRA

With passage of the 1997 Taxpayer Relief Act, the available IRA options have multiplied. There are now both deductible and non-deductible traditional individual retirement accounts as well as the new Roth and education IRAs. The education IRAs are not for retirement, but for college. Here are some of the main features of the different accounts:

Deductible Non-deductible Education

Your IRA Roth IRA traditional IRA traditional IRA IRA

Choices

Earnings grow

tax-deferred Yes Yes Yes Yes

Earnings taxed

upon withdrawal No1 Yes Yes No2

Ten percent

penalty on

withdrawals

before age

59 1/2 Yes3 Yes3 Yes3 N/A

Deductible

contributions No Yes No No

Annual

contribution

limit4$ 2,000$ 2,000 $2,000 $500

Subject to

minimum

withdrawal

requirement

after age 70 1/2 No Yes Yes N/A

Contributions

allowed after

age 70 1/2 Yes No No N/A

Income limits

Married $160,0005 $60,0005,6 None $160,0005

Spousal N/A $160,0005 N/A N/A

Single $110,0005 $40,0005 None $110,0005

1 Earnings are not taxed if part of a qualified withdrawal; you must hold account five years and withdraw only at 59A, at death, if disabled or for first-time home purchase.

2 Tax-free if used for qualified education expenses only, before age 30.

3 No penalty if taken as an early-withdrawal exception. Principal may always be withdrawn without penalty from a Roth IRA. See your tax adviser.

4 $2,000 is the total contribution allowed among all IRAs except education IRA.

5 Upper limit of phaseout range.

6 No limit if neither spouse is covered by an employer plan.

SOURCES: John Hancock Retirement Services, IRS