Can I set up a traditional IRA?
Almost anyone can set up a traditional IRA. The only requirements are that you generally must have taxable compensation (typically, salary or wages from your job) and be under age 70½ in order to put money into an IRA. Beyond that, the basic mechanics of setting up an IRA are pretty straightforward. An IRA is typically established with a bank, insurance or investment company, or other financial institution with an initial investment of as little as $50. It's as simple as picking an institution, completing the required paperwork, and making an opening deposit. The only potentially difficult steps are selecting specific investment vehicles to fund your IRA and designating your beneficiary.
You can contribute a total of $5,500 to all the IRAs you own (traditional and Roth) in 2014 (unchanged from 2013). Married couples may contribute $5,500 per spouse under certain conditions, even if one spouse has little or no income. In addition, if you're age 50 or older, you can make an extra "catch-up" contribution of $1,000 in 2013 and 2014. Your annual contribution can be made as a lump-sum payment or a series of payments, and can be made up until April 15 of the following year.
Although practically anyone with earned income who is under age 70½ can contribute the full $5,500 to an IRA in 2014, your ability to deduct contributions will depend on several factors (e.g., your adjusted gross income, your tax filing status, and whether you or your spouse is covered by an employer-sponsored plan). You may be able to deduct all, a portion, or none of your IRA contribution for a given tax year. You may even qualify for a partial tax credit.
Note that this discussion applies only to traditional IRAs. Roth IRAs are subject to special rules of their own.