Why the shift? Money earned in a Roth IRA can be taken out in retirement tax-free. Contribution limits for Roths are generally the same as with traditional accounts, with one major difference: As long as you are earning money, you can contribute to a Roth, regardless of your age.

• Advantages: The earnings are tax-free. This is very appealing to account holders who open a Roth early and let the money grow for decades, as well as to individuals who expect to be in the same or possibly higher tax bracket when they retire. You can contribute at any age. You can take money out on your timetable, not on the IRS' age 70½ withdrawal schedule.
• Drawbacks: Contributions are not tax-deductible. There is an earnings limit which restricts higher-income taxpayers from contributing to or converting traditional IRA money to a Roth account. However in 2010, income restrictions are waived for Roth conversions, and any taxes due may be paid over a two-year time frame, 2011 to 2012.

Workplace retirement savings
Many companies help their employees save for retirement by offering defined-contribution plans. As the name indicates, workers play a major role in building retirement savings by contributing a percentage of their incomes to these accounts.

3. 401(k) plans
In the private sector, these are commonly known as 401(k) plans; when the employer is a university, nonprofit agency or some government agencies, they are known as 403(b) plans and 457 plans. In some cases, the employer matches a portion of worker contributions.

• Advantages: Employee money goes into the account before payroll taxes are figured, meaning you'll save a bit on withholding taxes. Matching employer contributions help boost your retirement savings. You can put substantially more in a 401(k) than in an IRA. In 2008, the limits were $15,500 for 401(k)s and $5,000 for IRAs. Workers age 50 or older in 2008 could contribute an additional $5,000 to their workplace retirement plans versus just $1,000 more into an IRA. In 2009, the workplace contribution amounts increase to $16,500 for workers younger than 50 and $22,000 for older employees.
• Drawbacks: Contributions and earnings are tax-deferred, meaning you'll owe the IRS when you take the money out at retirement. You must begin distributions by age 70½. Not all companies match worker contributions, and some that do match do so with company stock rather than cash.

4. Roth 401(k) plans
Roth 401(k) plans became available in 2006. These accounts combine the basics of 401(k)s with the tax-free aspect of Roth IRAs. Essentially, workers put money into Roth 401(k)s after payroll taxes are withheld, meaning the account doesn't offer an immediate tax benefit. But when the money is withdrawn, it is tax-free.

• Advantages: Distributions are tax-free. Contribution levels, as with regular 401(k)s, are higher than for IRAs. Employer matching contributions increase your retirement savings. There are no adjusted gross income caps, so higher-income workers who might not be able to open a Roth IRA can contribute to a Roth 401(k). You can leave money in the account past age 70½.
• Drawbacks: These are not yet as available as regular 401(k) plans. Because money goes into this account after taxes are withheld, you get no immediate tax break.

Whether your 401(k) is a regular or Roth account, ultimate responsibility for your workplace retirement savings rests entirely on you. You generally must enroll in the account and then manage it, deciding which 401(k) offering best fits your personal financial situation. These concerns were addressed in provisions of the Pension Protection Act of 2006. Many companies have since adopted automatic enrollment for workers in 401(k) plans, which require employees to opt out rather than opt in.