| Summary | Contributions are typically made with pre-tax dollars. | Contributions are made with after-tax dollars. | Designed for selfemployed individuals and small-business owners and their employees. | Employees contribute a portion of their wages to the plan on a pre-tax basis. |
| Annual Contribution Limits | 2010 up to $5,000 ($6,000 if over age 50) or 100% of earned income, whichever is less. | 2010 up to $5,000 ($6,000 if over age 50) or 100% of earned income, whichever is less. | Up to 25% of total compensation, with a maximum contribution of $49,000 in 2010. | Employee funds plan through salary deferrals of up to $16,500 for 2010. Individuals aged 50 or older may make additional contributions. |
| Tax Treatment | Account balances compound taxdeferred until withdrawn. Contributions may be tax-deductible, depending on the individual's income and participation in an employer sponsored plan. | Account balances compound taxdeferred until withdrawn.Contributions are not tax-deductible. | Both contributions and the investment earnings grow taxdeferred until withdrawn. | Earnings grow taxdeferred until withdrawn. Contributions are tax-deductible. |
| Withdrawals | Required once the owner reaches age 70½ and are taxable. | Withdrawals on earnings are taxfree if taken after the owner reaches age 59½ and the account has been open for at least five years. | Required once the owner reaches age 70½ and are taxable. | Required once the owner reaches age 70½ and are taxable. |
| Eligibility | To open, owner must have earned income and be younger than age 70½ at year-end. | Eligibility is based on adjusted gross income (AGI). | Certain sole proprietors, partners or business owners, and the self-employed. | Most employees are allowed to participate. Some exceptions may include employees who have not worked at the company for a full year or are younger than age 21. |
