There were some misleading statements in the article.

For instance, "There are two types of IRAs: the traditional and the Roth" is flat-out wrong. There are, in fact, ten types of IRAs: individual retirement accounts, individual retirement annuities, employer and employee association trust accounts, simplified employee pension (SEP-IRA), savings inventive match plan for employees IRA (SIMPLE-IRA), spousal IRAs, rollover (conduit) IRAs, inherited IRAs, educational IRAs, and the Roth IRA. Each of these IRAs is covered in great detail in IRS Publication 590, "Individual Retirement Accounts (IRAs)."

The author also states that there are income restrictions for the traditional IRA and then says nothing about the Roth IRA. That’s rather misleading, especially since there is an income restriction for a Roth IRA which is a different and "harder" limit than the one for traditional IRAs. If you make above the income limits for a Roth IRA, you cannot make a full contribution without paying some hefty penalties. With a traditional IRA, you can still make a contribution if you exceed the income restriction, but the contribution is simply non-deductible.

There are actually more instances in which an investor can withdraw money before age 59 1/2 without penalty. Also, not only the Roth, but also traditional IRA money can be used for a first-time home purchase or to pay qualified educational expenses. The seven exceptions to the 10 percent penalty are: the IRA owner becomes disabled, the IRA owner dies, the payments are made in a series of "substantially equal periodic payments" made over the life expectancy of the owner, the money is used to pay unreimbursed medical expenses that exceed 7.5 percent AGI, the money is used to pay medical insurance premiums after the IRA owner has received 12 weeks of unemployment compensation, up to $10,000 is used for a first-time home purchase, or the money is used to pay qualified educational expenses.

More important than any of these details, however, is that you can only make contributions to IRAs from earned income. Generally, that means you need to receive a W-2 for those earnings. If mom and dad pay all your bills and give you an allowance at school, you cannot use your allowance money or student loan checks to open an IRA. If you only made $850 at the gas station this year, that’s all you’re allowed to contribute to your IRA.

Unless you’re a far more fortunate student than I was as an undergrad, I think it’s probably best to concentrate on far easier and far more fundamental areas of personal finance than retirement planning. If you’ve got credit card debt, you can forget about putting money into an IRA. The single best thing you can do is to first become debt-free. I’d argue it’s a rare student who is ready to participate in an IRA; there are far more fundamental things you can do to be fiscally responsible while in school. Once you graduate and are making the big bucks, then by all means, stash as much money as you can into 401(k)s, IRAs, 403(b)s, or anything else you’re eligible to put your money into. In the meantime, learn as much as you can about investing. There is no reason to be in a hurry. The author is correct that, "The most valuable thing to an investor is time." That time isn’t just for watching principal grow; it’s time for planning, too.

Dan Prorok