SPANISH FORT, Ala. — Let's be honest. We all hate to pay taxes. Well, most of us hate to pay taxes. There are some politicians that have never met a tax increase they did not love.

I watched one of the presidential debates the other night and was dismayed at the blatant arrogance of some of the candidates that openly admitted that one of the first things they would do, if elected, would be to raise your taxes.

I still have not figured out who told them that was a winning strategy.

Fortunately, for you and me, we still have one great escape left when it comes to avoiding at least some taxation. That escape is the individual IRA.

The IRA comes in two basic flavors: The traditional and the Roth IRA.

Both have tax advantages, however, they are significantly different and you need to seek the advice of a good financial advisor to determine which one is right for you.

Let's explore the features of these two retirement savings vehicles so that you can have a working knowledge of how they work.

The Traditional IRA — This type of IRA is the one that most of us know the best. Under this plan, the contributions that you make to your IRA may be tax deductible on your federal income taxes.

Please seek competent tax counsel, as the deductibility of contributions varies depending on income.

The growth in a traditional IRA is “tax-deferred.” This means that you will not be taxed on the growth each year, rather, you will be taxed when you actually withdraw the money as income-likely at a lower tax rate when you have retired.

Thus, you are able to earn interest in three ways: Interest on principal, interest on interest, and lastly, interest on the taxes you did not have to pay.

This “triple compounding” is what Albert Einstein referred to as the eighth wonder of the world, and it is one of the most powerful wealth building tools still available to us today.

The contribution limits are income based and the 2007 annual maximum amount that you can contribute if you are under age 50 is $4,000.

If you are age 50 or over you are allowed a “catch up provision” and you can contribute up to $5,000 for the year.

Contributions for 2007 can be made up to the date you file your taxes or April 15, 2008, whichever is earlier.

Keep in mind that this is a retirement account and any withdrawals prior to age 59 could trigger an IRS imposed penalty. IRAs can be invested in a number of different places.

Talk to your financial advisor as to what type of accumulation vehicle is best suited for your needs.

The Roth IRA — The Roth is a newer IRA and is similar to the traditional with a few distinct exceptions.

The contributions to the Roth are not tax-deductible. However, the income at retirement is tax-free!

Therefore, you must decide which feature is more important to you-tax deductibility now, or tax-free income later.

One other major difference should be noted. With the traditional IRA you must begin taking distributions when you reach age 70. This is called “Required Minimum Distributions,” or RMD for short.

It is the manner in which the IRS frees up tax money that has been deferred for so many years.

There is no requirement for RMD in the Roth IRA; therefore you are able to accumulate your money for a longer period of time.

Contribution limits are the same as with the traditional IRA.IRAs are still one of the best tax-advantaged accounts you can own.

They are easy to establish and have very low expenses. Most companies will allow you to open an IRA with as little at $25 per month in contribution.

Non-working spouses are even eligible to open and contribute to an IRA.

There are tons of reasons to own an IRA, and the tax favored status that they enjoy is just one.

Don't let this great tax escape pass you by … you never know how much longer it may be around.

George Harris Jr. is a 20- year veteran of the insurance and investment industry. If you have questions or comments, or have a topic you would like him to cover, he may be reached at his Gulf Shores office at 251-968-1234 or via email at george@georgeharrisfinancial.com