A Short IRA History

The IRA knows its origins in the year 1974, when Employee Retirement Income Security Act was passed. This act provided amongst other things, for the realization of the IRA. The IRA back then however, was not exactly like the one we have today.
Originally IRA contributions were not deducted from pre taxed income, and the limits were of just $1500 or 15% of the total income of the household, whichever is the lowest.

The goals of the IRA were to:

• Provide a retirement plan for individual who were employed by companies, which did not provide them with a retirement option.
• To preserve the position of plan assets as being tax-deferred, upon termination of employment.

This retirement option, which was then offered solely through banks, became popular immediately, and attracted billions of dollars in contributions. Another law called the Economic Recovery Tax Act, then made the IRA even more available, since is allowed it to be offered to everyone under the age of 70 and a half.
During the years contributions were allowed to increase, and after that some restrictions were introduced that limited the amount of contributions that could be made by people who were earning less than $35,000 if single, or less that $50,000 when married.

During the years other changes have taken place that allow non working spouses to make contributions to the IRA, and catch up contributions were also allowed for people aged 50 or over.

More recently however, owners of a traditional IRA were given the option to switch to a Roth IRA, irrespective of their income level. In addition to the release from this income cap, taxpayers that decide to switch to a RIRA, are also permitted to divide taxation on the funds that will be converted between 2010 and 2011.

Reference: http://bfponline.com/weblog/682/history-of-the-individual-retirement-account-ira/