Ethan, great episode explaining IRAs, however, you left out that once your income is above a certain amount you cannot invest in an IRA. Off the top of my head I do not know what it is for single people, i think 80k and i think it is around 160k for couples filing jointly.

Great point. I realized this after I had shot the video and is one of the main reaons I linked those two pages on Roth and Traditional IRA's up above.

That being said the Income eligibility limit for Roth IRA's in 2007 is $99,000 (single) - or- $156,000 (married).

For a Traditional IRA, anyone can contribute, however only those that make less then $53,000 (single) - or - $83,000 are eligible for full tax deductions. However "...even if you don't qualify to deduct your contribution, the benefits of tax-deferred growth and the potential of compounding are too great to ignore. You should still consider making a nondeductible contribution." - https://personal.vanguard.com/us/accounttypes/retirement/ATSTradIRAWhoContributeContent.jsp

Cheers.

Ethan

Do you know what the typical penalties are for withdrawing before the set age on both type of accounts?

It depends on what you plan to use the money for, as some uses qualify for exemptions from early withdraw penalties. Details on early withdraw penalties for Roth IRA's can be found here: https://personal.vanguard.com/us/accounttypes/retirement/ATSRothIRADistContent.jsp and early withdraw penalties for Traditional Ira's con be found here: https://personal.vanguard.com/us/accounttypes/retirement/ATSTradIRADistContent.jsp

In brief it is usually a 10% penalty + taxes on investment gains in the case of a Roth IRA.