Traditional IRA vs Roth IRA
Compare Traditional and Roth IRAs to choose the right tax-advantaged retirement account for your goals.
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| 2026 Contribution Limit | $7,500 ($8,600 if 50+) | $7,500 ($8,600 if 50+) |
| Tax on Contributions | Tax-deductible (if eligible) | After-tax (no deduction) |
| Tax on Withdrawals | Taxed as ordinary income | Tax-free (qualified withdrawals) |
| Income Limits | Deduction phases out at higher incomes | Contribution phases out at higher incomes |
| Required Minimum Distributions | Required starting at age 73 | None during your lifetime |
| Early Withdrawal Penalty | 10% penalty before age 59½ | 10% penalty on earnings before 59½ |
| Best For | Reducing taxes now; expect lower rate in retirement | Tax-free growth; expect higher rate in retirement |
Overview
Traditional and Roth IRAs both offer tax advantages for retirement savings, but they differ in when you pay taxes. The right choice depends on whether you expect your tax rate to be higher now or in retirement.
Choose Traditional IRA when
Choose a Traditional IRA if you are in a high tax bracket now and expect to be in a lower bracket in retirement, or if you need the upfront tax deduction.
Choose Roth IRA when
Choose a Roth IRA if you are early in your career, expect higher income later, or want tax-free income and flexibility in retirement.
Our verdict
If you are early in your career or expect your income (and tax rate) to rise, a Roth IRA is usually better. If you want to reduce your tax bill today and expect a lower tax rate in retirement, a Traditional IRA may win.
Frequently asked questions
- What is the difference between Traditional IRA and Roth IRA?
- Traditional and Roth IRAs both offer tax advantages for retirement savings, but they differ in when you pay taxes. The right choice depends on whether you expect your tax rate to be higher now or in retirement.
- When should I choose Traditional IRA over Roth IRA?
- Choose a Traditional IRA if you are in a high tax bracket now and expect to be in a lower bracket in retirement, or if you need the upfront tax deduction.
- When should I choose Roth IRA over Traditional IRA?
- Choose a Roth IRA if you are early in your career, expect higher income later, or want tax-free income and flexibility in retirement.
Not sure which is right for you?
Warren looks at your accounts, income and goals, then gives a recommendation built for your situation.