(ARA) – Even if you’re far from retiring, it’s never too early to start planning for it. But as you may quickly learn, it can be more challenging than you think. It can be difficult to know what opportunities are best for you when it comes to saving for your retirement.

When considering retirement savings opportunities it is easy to overlook the traditional IRA. Many individuals assume they are not eligible to make contributions to a traditional IRA, presumably confusing the rules regarding eligibility to contribute with the more commonly noted rules regarding the deductibility from income for contributions.

Rob Fishbein, a vice president and corporate counsel in Prudential’s Tax Department, answers these frequently asked questions about IRAs:

Q: Who is eligible to contribute?

A: The surprising answer for some people is that if you earn income and are younger than 70 1/2 you can contribute to a traditional IRA, regardless of income level and regardless of whether you or your spouse are covered by a work-sponsored retirement account – such as a 401(k) plan.

Q: How much can I contribute?

A: Most individuals have the option in 2010 and 2011 of contributing $5,000 to a traditional IRA, or $6,000 if you are age 50 or older, and enjoying tax deferred earnings. This is a powerful savings opportunity that should be used to the maximum extent possible.

Q: How can an IRA impact my tax liability?

People often confuse the eligibility rules with the deductibility rules. Whether you can deduct the contribution from income depends on whether you or your spouse are covered by a retirement plan at work. If neither of you are covered by a plan then you can take a deduction for an IRA contribution no matter what you earn. If both of you are covered by a plan, or if only the spouse making the IRA contribution is covered by a plan, then for 2010 you can still take a deduction if you make less than $89,000. But you lose eligibility to take a deduction if you jointly make $109,000 or more. In between those two numbers you can take a partial deduction. Similar rules with different income limits apply for single taxpayers or where the spouse making the contribution is not covered by a plan.

Q: Why should I make the maximum contribution each year?

A: Even if you are not eligible to deduct your contribution to a traditional IRA, the traditional IRA offers a way to grow your savings for retirement on a tax-deferred basis, since income earned is only subject to income tax when distributed. Second, you can convert the traditional IRA to a Roth IRA because the income limits that previously were in place for Roth conversions have been eliminated. This means that even if you make too much income to contribute to a Roth IRA directly, you can do so indirectly and enjoy tax-free earnings after the date of conversion.

Q: How can I get started?

A: The first call to make should be to your financial planner or tax adviser to review your personal circumstances and to make sure that starting or contributing to a traditional IRA makes sense for you.