Roth IRA vs. Traditional IRA: Which Should You Choose?

Both IRAs shelter your investments from taxes — the difference is when you pay:

• Traditional IRA: contribute pre-tax (if you qualify for the deduction), pay income tax on withdrawals in retirement.
• Roth IRA: contribute after-tax dollars now, withdraw everything — contributions and decades of growth — tax-free in retirement.

For 2026, the IRS contribution limit is $7,500 ($8,600 if you’re 50+, after the catch-up rose to $1,100), shared across all your IRAs combined. Limits change most years — verify current figures at IRS.gov.

The core question: tax rate now vs. later

The math reduces to a comparison: your marginal tax rate today versus your expected rate in retirement.

• Expect a higher rate later (early career, income climbing, or you believe rates broadly rise) → Roth wins: pay the low rate now, escape the high one later.
• High earner today, expecting a modest retirement income → Traditional wins: deduct at your high rate now, withdraw at lower rates later.
• Genuinely unsure → many savers split between both, which hedges the bet and creates flexibility to manage taxes in retirement.

Rules that tilt the decision

Roth income limits. For 2026, Roth eligibility phases out at $153,000–$168,000 of modified AGI for single filers and $242,000–$252,000 for married filing jointly. Above that, direct Roth contributions are off the table (though the “backdoor Roth” conversion strategy exists — worth professional guidance).

Traditional deduction limits. If you (or your spouse) have a workplace retirement plan, the traditional IRA deduction phases out at much lower incomes — a nondeductible traditional contribution loses most of its advantage.

Flexibility favors Roth. Roth contributions (not earnings) can be withdrawn anytime, tax- and penalty-free — a useful backstop. Roths also have no required minimum distributions during the original owner’s lifetime, and they’re powerful inheritance vehicles.

Early-retirement and tax-diversification angles give Roth a slight edge for many people even when the pure rate math is a coin flip.

A simple default

A widely used heuristic: Roth when your marginal federal rate is in the lower brackets (roughly 12% or below — some extend this to 22%), traditional in the upper brackets, and split when torn. And remember the sequencing: if your employer offers a 401(k) match, capture all of it before funding any IRA — the match beats either tax treatment.

This is one of the rare money decisions with no wrong answer between the two — both crush a taxable account for retirement money. See what consistent contributions become with the compound interest calculator.