Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you.
Choosing between a Roth IRA and a traditional IRA comes down to one key question: do you want to pay taxes now or later?
Both accounts offer powerful tax advantages for retirement savings, but they work in opposite ways. This guide explains the differences and helps you decide which one is right for your situation.
Rates and figures as of May 2026.
Roth IRA vs Traditional IRA: Quick Comparison
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Tax treatment of contributions | After-tax (no deduction) | Pre-tax (may be deductible) |
| Tax treatment of withdrawals | Tax-free in retirement | Taxed as ordinary income |
| Income limits to contribute | Yes (phases out at higher incomes) | No income limits to contribute |
| Deduction limits | No deduction | Depends on income and workplace plan |
| Required minimum distributions | None (during owner’s lifetime) | Must start at age 73 |
| Early withdrawal of contributions | Anytime, tax and penalty-free | Taxes + 10% penalty before age 59.5 |
| 2026 contribution limit | $7,000 ($8,000 if 50+) | $7,000 ($8,000 if 50+) |
How a Roth IRA Works
With a Roth IRA, you contribute money you have already paid taxes on. The money grows tax-free, and when you withdraw it in retirement (after age 59.5 and the account has been open at least 5 years), you owe no taxes at all.
This is especially valuable if you expect your income — and tax rate — to be higher in retirement than it is now.
How a Traditional IRA Works
With a traditional IRA, your contributions may be tax-deductible in the year you make them. The money grows tax-deferred — you do not pay taxes until you withdraw it in retirement.
If you are in a high tax bracket now and expect a lower rate in retirement, a traditional IRA can reduce your tax bill more than a Roth would.
Roth IRA Income Limits in 2026
| Filing Status | Full Contribution Up To | Phase-Out Range | No Contribution Above |
|---|---|---|---|
| Single / Head of Household | $150,000 | $150,000–$165,000 | $165,000 |
| Married Filing Jointly | $236,000 | $236,000–$246,000 | $246,000 |
| Married Filing Separately | $0 | $0–$10,000 | $10,000 |
If your income is above the Roth IRA limit, look into the backdoor Roth IRA strategy: contribute to a non-deductible traditional IRA, then convert it to a Roth.
Traditional IRA Deductibility in 2026
You can always contribute to a traditional IRA regardless of income. But you can only deduct the contribution from your taxes if:
- You (and your spouse) are not covered by a workplace retirement plan, OR
- Your income is below a certain threshold if you are covered by a workplace plan.
For 2026, single filers covered by a workplace plan can deduct the full amount up to $79,000 MAGI. The deduction phases out between $79,000 and $89,000.
Which Should You Choose?
Use this simple rule as a starting point:
- Choose a Roth IRA if: You are early in your career, expect higher income in the future, or value flexibility (no RMDs, can withdraw contributions anytime).
- Choose a traditional IRA if: You are in a high tax bracket now and expect to be in a lower one in retirement, or if you want to reduce your taxable income this year.
- Do both: Split contributions between the two if you are unsure. Just make sure the total does not exceed the annual limit.
Where to Open an IRA
You can open an IRA at most major brokerages. Look for:
- No account minimums or low minimums
- Wide selection of low-cost index funds
- Commission-free trades
Popular options include Fidelity, Vanguard, Schwab, and Betterment. All offer both Roth and traditional IRAs.