In so many ways, the Individual Retirement Account is exquisitely simple. If you can recite your ABC's without hesitating, or even if you can unfold a napkin, you have enough intellectual firepower to open an IRA.

Despite their simplicity, however, IRAs intimidate many Americans. And that's one reason why IRA opportunities have been passed by more times than a dirty truck stop. To be sure, there is $3.7 trillion sitting in IRA accounts today, but nearly half of that money came through rollovers from 401(k) plans. In hopes of drumming up more interest for this retirement wallflower, I'm going to address some of the most stubborn IRA myths. Here goes:

Myth No. 1: The traditional deductible IRA is best, because I can pocket a tax deduction.

Snagging a tax break can be tantalizing, especially at this time of year, but the Roth IRA is a better bet for just about anybody who qualifies. Once you understand how each IRA works, you'll probably come to the same conclusion.

With a traditional deductible IRA, you can happily capture a tax deduction. If you put $4,000 into one of these IRAs and you're in the 15 percent tax bracket, for example, you'd earn a $600 tax deduction. But when you withdraw this money during retirement, you'll pay income taxes on all this loot. And the federal government, impatient with all the years you've hoarded the money, will require that you begin siphoning the account shortly after reaching the age of 70 1/2.

With a Roth, you won't be handed an upfront tax break, but you will be amply rewarded for your delayed gratification. The money grows tax-free, and the government will not force you ever to disturb your Roth stockpile. What's more, if you do eventually tap into the account, you will owe no federal taxes at all. For either of these IRAs, income limitations exist, but the most inclusive IRA is the Roth, which the vast majority of taxpayers will qualify for.

Myth No. 2: If I make too much to contribute to a Roth, it's definitely not worth bothering with an IRA.

Not so fast. It's true that the wealthiest among us have been excluded from the Roth party. But Congress opened the door a crack last year when it passed legislation that will allow rich investors an indirect way to move cash into a Roth.

Beginning in 2010, anybody, regardless of their financial girth, will be able to convert a traditional IRA into a Roth. Wealthy investors, who are giddy at the prospects of shielding their money from future tax hits, are now shoveling money into traditional nondeductible IRAs. Among IRAs, the nondeductible traditional IRA is the ugly duckling, which is why you rarely hear anything about it. Investors receive no tax deduction for their contribution, but as long as the money remains in its IRA cocoon, no taxes are owed.

So far the nondeductible IRA sounds like a Roth, but here's the crucial difference: Unlike the Roth, when money is taken out of a nondeductible IRA, the cash is hit with income taxes. Sophisticated investors don't care about this blemish because in three years, they plan to escort all this money into a Roth. They will have to pay tax on the assets after making the switch, but frankly it should be well worth the expense. The Roth is an excellent way to diversify a family's tax burden and protect assets from future tax increases. Continued...