Your Individual Retirement Account can be part of the foundation of a financially secure retirement. Many experts suggest that your living expenses after retirement to average 60% to 75% of your pre-retirement expenses. Social Security will provide some benefits, but your retirement income will primarily depend on your other assets including your company retirement plan and your IRA.

Almost every individual with earned income can contribute to either a regular IRA or Roth IRA. Here is a simple chart to help you decide which one is right for you.

Feature Regular IRA Roth IRA Alert Me
Age restrictions Under 70½ No age restrictions
Income eligibility restrictions Must have earned income equal to or greater than contribution. No restriction on maximum income. Must have earned income equal to or greater than contribution. For 2019, full contributions can be made if Modified Adjusted Gross Income is less than $193,000 for joint filers or $122,000 for individual filers. No contributions are allowed if MAGI is above $203,000 or $137,000 respectively.
Taxation of earnings in IRA Tax deferred Tax deferred
Distribution requirements Must start at age 70½. No distribution requirements
Taxation of distributions Taxed as ordinary income Not taxed
Contribution limits $6,000 for 2019. Indexed for inflation thereafter $6,000 for 2019. Indexed for inflation thereafter
Catch-up contribution for those age 50 and above $1,000 for 2019. Indexed for inflation thereafter $1,000 for 2019. Indexed for inflation thereafter
Deductibility of contributions Deductible if not covered by employer plan or if income is below certain levels. Not deductible
Penalty for withdrawal before age 59½ Generally, 10% penalty Generally, 10% penalty

The savings, tax deferral and earnings opportunities of an IRA make good financial sense. You have until April 15th of the following year to fund your IRA. 2018 contributions must be made by April 15, 2019 and 2019 contributions can be made from January 1, 2019 until April 15, 2020. The sooner you make your contributions, the more your money will grow.