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Everyone who has a job has a tax problem. The harder you work to get ahead and build your income, the more taxes you pay. In order to have the maximum cash at retirement, you need to find a way to minimize taxes.

Many people think that tax shelters are only for the wealthy. Yet thousands of wage earners fail to take advantage of a tremendous tax shelter that's right under their noses!

In the early 80's, Congress made it possible for wage earners to contribute to an Individual Retirement Account (IRA). In 1997, Congress passed new legislation to make IRAs more flexible while adding more options for wage earners. In 2001, Congress approved changes in the tax law to allow higher limits on IRA contributions. These changes gradually raise the maximum amount that can be contributed to an IRA (traditional and Roth) from $2,000 to $5,000 in 2008.

Keep in mind while considering your options that it is in your best interest to consult a tax advisor so you can explore which IRA options are most ideal for your personal tax situation.

Defer Paying

Taxes
IRAs have always been a good way to save money for retirement because of their tax-favored status. By establishing an IRA, you can defer paying taxes on your IRA earnings. Since these earnings grow without being taxed, more money is allowed to compound and work harder for you than if income taxes were taken out of each year's earnings.

Tax-Free Withdrawals Through a Roth IRA
With the Roth IRA, Americans have another way to save on taxes. Instead of the up front deduction through a traditional deductible IRA, Roth IRA contributions are non-deductible. But these contributions and their earnings are allowed to grow tax deferred and be withdrawn tax-free as long as the Roth IRA account has been open at least five years and you are at least age 59 1/2 when you begin withdrawing the proceeds.

Remember the fundamental rule of tax savings: Get every deduction or deferral you can get!