A reference to an IRA without the moniker “Roth” in front of it is a reference to a traditional IRA, a tax-favored account designed to encourage saving for retirement. If your income is below a certain level or you are not covered by a retirement plan at work, deposits into a traditional IRA can be deducted. The maximum annual contribution for 2013—deductible or not—is $5,500 or 100 percent of the compensation earned during the year, whichever is less. Those who are age 50 or older at the end of the year can add an extra $1,000 “catch-up” contribution, bringing their annual limit to $6,500 for 2010. Also, spouses can contribute part of his other compensation to an IRA for a non-working spouse. The tax on all earnings inside the IRA is postponed until you withdraw the funds. In most cases there is a penalty for withdrawing funds before you reach age 59 1/2. The right to deduct contributions phases out at higher income levels for those covered by a retirement plan at work. See also Roth IRA.