If your income disqualifies you from funding a Roth, consider the traditional IRA, which offers its own set of perks.

With a traditional IRA, you may be able to claim a full or partial income-tax deduction for your contributions, as long as you don't participate in a retirement plan at work, such as a 401(k), and if your income doesn't exceed certain limits. For single filers, that's a maximum of $55,000 to $65,000 for individuals, or $89,000 to $109,000 for married couples filing a joint return. If your employer does not offer a retirement plan, you can get the full tax deduction for traditional IRA contributions regardless of your income.

Even if you can't claim any tax breaks from your traditional IRA, you can make nondeductible contributions to a traditional IRA. And, beginning in 2010, you can convert a traditional IRA to a Roth IRA regardless of your income.

Either way, the traditional IRA lets earnings grow tax-deferred, so you postpone paying income taxes until assets are taken out of the account. That has to begin by the time you're 70½ or you'll face penalties for not taking so-called required minimum distributions. That's also the age when you're prohibited from making additional contributions to the traditional IRA.