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You are eligible to make a full ROTH IRA contribution if your AGI is less than $181,000 and are eligible to make a partial ROTH IRA contribution if your AGI is between $181,000 and $191,000. Unlike Traditional IRAs, there are no rules pertaining to whether or not you are covered by an employer sponsored retirement plan.Page 2 of 2 - ROTH IRA contributions are not tax-deductible. Instead, the money that you contribute to a ROTH is taxable in the year it is earned, but the contribution will then be allowed to grow and compound tax free. Distributions from a ROTH IRA (assuming they meet requirements) are not taxable. Direct contributions you make to a ROTH IRA may be withdrawn tax free and penalty free at any time. However, earnings within a ROTH IRA may only be withdrawn tax free and penalty free after five years and having reached the age of 59 �. If those requirements are not met then earnings will be taxed and incur a 10 percent penalty. Unlike Traditional IRAs, there are no rules for when you need to start taking distributions from a ROTH IRA. How do you decide which type of IRA is right for you? For starters, you want to think about your own tax situation. If you are currently in a low tax bracket and anticipate that you may be in a higher tax bracket in your retirement years, then a ROTH IRA makes sense. It would be preferable to pay tax now at a lower rate than pay tax later at a higher rate. On the other hand, if you are currently in a high tax bracket and think you will be in a lower tax bracket in retirement than a Traditional IRA makes sense. The problem here is that your current income may make you ineligible for a tax-deductible contribution. If that is the case, you may want to consider tax-deferred savings options you have through employer-sponsored retirement plans. Both Traditional IRAs and ROTH IRAs are excellent retirement savings options. 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