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Let's quickly review why an IRA makes sense, even though you may think it has some disadvantages:

• An IRA is a tax-advantaged savings vehicle for retirement.
• You have control over how your savings are invested. You can choose from individual stocks and bonds, mutual funds, or certificates of deposit—just to name a few choices.
• Your IRA funds are transferable. If you don't like where your IRA is invested, you can easily transfer the funds (see below).
• IRAs are easy to set up and maintain.
• You don't need permission to use your money.
• If you withdraw the money before age 59½, it is subject to ordinary income taxes plus a 10% tax penalty. Exemptions from penalties include death, disability, and taking substantially equal installments over your lifetime. Individuals may also make penalty-free withdrawals from IRAs for medical expenses in excess of 10% of adjusted gross income.

SUGGESTION: Penalty-free (and tax-free from Roth IRAs) withdrawals are allowed from IRAs for qualified first-time homebuyers up to a $10,000 lifetime limit. In addition, penalty-free withdrawals are allowed for qualified education expenses.

SUGGESTION: Under the rollover rules, you may withdraw money from an IRA temporarily and redeposit the full amount within 60 days in the same or a different IRA, qualified employer plan, 403(b) plan, or 457 plan without tax consequences. This provision can be an alternative if you need a short-term loan. But use this strategy with extreme caution. Generally, if you don't repay the loan within 60 days, you'll pay income tax and a 10% penalty on the amount borrowed, and you can't put the amount back into the IRA. Also, such rollovers may not be made more than once per year from each IRA (but an individual is not limited to the number of IRAs he or she may have). If you just want to transfer your IRA, and do not need to take possession of the funds, use a direct trustee-to-trustee transfer, which is easier and not subject to any frequency or time limitations. Your new trustee will handle the details and paperwork for you.

IMPORTANT NOTE: You cannot borrow against your IRA account as you can with a 401(k) plan. You also cannot use the account to secure a loan.

IMPORTANT NOTE: Unlike qualified retirement plans, the money you have in an IRA may not necessarily be protected from your creditors. Depending on state law, some courts have ruled that an IRA can be reached by creditors.