Roth or regular IRA? What are the differences? What impact do they have on your retirement investing? Individual retirement accounts (IRAs) offer the opportunity for you to have more money in your later years and the ability to keep more of your long-term investments.

Roth IRA

Like existing IRAs, the Roth IRA allows contributions by most taxpayers of up to $3,000 annually to grow tax free. But the major difference is that withdrawals won't be taxed, as long as they're not taken within five years of opening and aren't tapped before age 59 1/2. Contributions, however, will not be tax-deductible.

You may want to consider transferring some conventional IRA monies into a Roth IRA. You'll have to pay taxes on previously deductible contributions and investment earnings, but it may be worth it. You'll have to consider your ability to pay the taxes now, and your expected tax rate in retirement in making the decision. Another advantage: you're not required to start taking money out at 70 1/2 unless you're retired. Those who continue to work beyond that age can leave their full balance in the 401(k) until the year following retirement. Another new twist: those over 70 1/2 can continue to fund their accounts.

Education IRA

Taxpayers can also establish IRAs specifically for the funding of higher education costs. Contributions of up to $2,000 annually can be made for each child under 18. The non-deductible contributions won't be subject to a gift tax, and the accounts will be tax exempt. Also, distributions that don't exceed amounts spent on education will be tax free. But all or part of the excess not spent on education may be subject to taxes and penalties.

Opening an education IRA is a good way to save for college, but having one might not provide a net gain. Specifically, its still unclear whether having an education savings account would affect your financial aid eligibility. But if that's not an issue given your aid eligibility or your children's ages, such an IRA may make sense.

IRA Rollovers

If you retire or change jobs, you may receive a distribution from your pension or company retirement plan. You must make a decision about what to do with that lump sum within 60 days of the date you receive your money in order to ensure that you don't incur heavy taxes and penalties. You'll also want to take immediate steps to invest those funds for continued growth.

To avoid any income tax withholdings, its best to have the distribution transferred from the former plan directly to the new custodian, rather than receiving a check for the amount from your former plan. Receiving the check personally will trigger a withholding tax. The proper transfer forms are usually provided by both the new and former custodians.

An IRA rollover provides an ideal way to continue to benefit from a tax-deferred retirement savings. If you decide to rollover your distribution into an IRA within the 60 days, you avoid paying taxes. Your account continues to grow tax-deferred and can even be moved into another employer plan later. Most no-load mutual fund companies can set up an IRA rollover for you; just call for information.