The ability to make tax-free contributions to retirement plans is still one of the U.S. government’s greatest giveaways – that and deductions for home mortgage interest payments. Even in today’s economic climate with a less than gung ho consumer confidence level and economic forecast, deductible retirement contributions still make sense in most cases.

This is not necessarily the case when it comes to Roth IRAs, where contributions to the program are not deductible when made, but can be withdrawn tax-free at retirement. There is little consensus as to whether these contributions make economic sense in a declining market. It doesn’t feel good to pay income taxes on the amounts you contribute to the plan when invested assets are declining in value. While tax relief is being considered by Congress, it’s something you really have to check out with both your investment and tax advisor.

But even if the balance in your 401(k) plan has suffered losses lately (as most people’s have) avoiding current income tax on the amounts you save for retirement can still be a great deal, especially if you have time before retirement. True it’s really a better deal when those tax free contributions grow and grow, but even when they stagnate or lose a few points before they gain, the income tax savings on the money you put away is a benefit not to be wasted.

For those of you lucky enough to be employed by a company which sponsors these retirement programs, or even better – a business owner able to put money into a profit sharing, pension, or 401(k) plan, don’t ignore the chance to save for the future just because the “present” isn’t as rosy as you’d like. The most commonly known benefit, 401(k) plans, permit tax free contributions of up to $16,500 for 2009, up from $15,050 in 2008. If you have the funds, it is a boon to make tax free contributions, accumulate tax free growth on those assets and only pay tax on withdrawals at retirement.

And, even if the worse case, if you need to get at the cash and are considering an early distribution, the 10% penalty plus your regular tax rate may not be as onerous as credit card company penalties and interest rates. Also, if you take out IRA funds and re-deposit them in a new IRA within 60 days, you can essentially get a tax-free loan under the roll-over rules. IRA’s can be a good source of funds in tough times.