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The markets have been battered by the recession, but that's not an excuse to forego contributing to your IRA. Investing for the future means planning ahead now, no matter what the markets may be doing on a day-to-day basis.

Unfortunately, one of the biggest barriers many people face when it comes to investing in an IRA is simply getting started. Should you go with a traditional or Roth? Should you invest in mutual funds or stocks? And how much money should you ideally be contributing on a yearly basis? All are valid questions that are actually easy to answer once you understand a little more about how individual retirement accounts work.

Why an IRA?

There are hundreds of different retirement accounts out there, but if your employer doesn't offer a company-wide plan that fits your specific needs and goals, then an IRA may very well be your best option. For those who are already maxing out on contributions to employer-sponsored 401(k) or 403(b) plans, you may still be able to invest additional funds in an IRA as long as your annual income doesn't exceed $95,000, for those filing individually, or $150,000, for those filing a joint tax return—making the IRA a versatile retirement option that can work for a wide variety of people.

Traditional vs. Roth

After making the decision to open an IRA, you'll need to choose between a traditional or Roth. Traditional IRAs offer the advantage of allowing you to make tax-free contributions, which will reduce you overall liability come tax season this year. However, the downside to opening a traditional account is that standard income taxes will have to be paid on the funds once you choose to withdraw them during retirement.

The money you invest in a Roth account, meanwhile, cannot be used as a deduction on your income taxes this year. However, those funds can be withdrawn tax free after the age of 59½, which reduces your financial burden during retirement. Ultimately, the decision between a Roth and a tradition account is determined largely by whether you would rather pay more taxes now or during retirement.

Where to Invest

One of the biggest benefits of an IRA account is the flexibility in investing. Whether you're interested in long-term CDs, money market accounts, mutual funds, or individual stocks, you can keep your IRA account wherever you prefer. Although banks and brokerage firms may simplify the process by letting you open an IRA online, it's important to keep in mind that many of these accounts may have a minimum initial investment of $1,000 or more.

How Much to Contribute

Because of the tax advantages, it's worthwhile to contribute as much as you can to your IRA each year—up to $5,000 annually for both traditional and Roth accounts. Investors over the age of 50 are eligible to contribute even more as of 2009, up to $6,000 or the amount of your taxable income, whichever is smaller.

Specific IRA contribution limits change on an annual basis, which is why it's worthwhile to check out the IRS website for the latest limits and regulations before making any contributions.

Stephanie Miles is a freelance writer living in New York City.