An IRA is one of the best ways to save for retirement outside of a workplace plan, and you have two versions to choose from: Roth or Traditional. The choice comes down to one question: will your tax rate be higher now or in retirement? Take the deduction now with a Traditional IRA if your rate is higher today. Pay the tax now with a Roth if you expect a higher rate later, or simply value tax-free income in retirement.

Both are accounts you open yourself, through a broker or bank, and both usually offer far more investment choices than an employer's 401(k). The differences that matter are in contributions, taxes, and withdrawals.

How Roth and Traditional IRAs are taxed

The core difference is when you pay tax. A Traditional IRA takes pre-tax dollars and taxes the withdrawals; a Roth IRA takes after-tax dollars and the qualified withdrawals come out tax-free.

Here is the part most people get wrong: a Traditional IRA contribution is not automatically deductible. If neither you nor your spouse is covered by a retirement plan at work, you can deduct the full contribution at any income. If one of you is covered, the deduction phases out over the income ranges below. For 2026:

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How much you can contribute (2026)

The contribution limit is the same for both types. For 2026, you can contribute up to $7,500 across all your IRAs, or $8,600 if you are 50 or older, which includes a $1,100 catch-up. That catch-up rose from $1,000 for 2026, the first increase to it in nearly two decades, because it is now indexed to inflation.

You can split contributions between a Roth and a Traditional IRA in the same year, but the two together cannot exceed the annual limit.

Income limits: Roth eligibility vs. Traditional deductibility

Income affects the two accounts differently. A Traditional IRA has no income limit on contributing; income only limits the deduction, as shown above. A Roth IRA has an income limit on the contribution itself. For 2026:

Earning too much to contribute to a Roth directly does not close the door. A backdoor Roth IRA, contributing to a Traditional IRA and converting it, is available at any income, though it works cleanest if you have no other pre-tax IRA balances.

Withdrawal rules and RMDs

The number to know for both accounts is 59 1/2. Withdraw before then and you generally owe a 10% penalty plus any income tax due.

With a Roth IRA, you can take out your contributions at any age with no tax or penalty, because you already paid tax on them. Only the earnings are taxed and penalized if withdrawn early. With a Traditional IRA, you deducted the contribution and deferred the tax, so every dollar you withdraw, contributions and earnings alike, is taxed as ordinary income, plus the penalty if you are under 59 1/2.

The accounts also differ at the other end of life. A Roth IRA never requires you to take money out. A Traditional IRA requires required minimum distributions starting at age 73 for those born 1951 to 1959, or 75 for those born in 1960 or later. (If you reached 70 1/2 before the rules changed in 2020, an earlier start age applied.) That makes a Roth more useful if you want to leave the account untouched or pass it to heirs.

Which one should you choose?

Work through it in this order:

1. Compare tax rates. Higher bracket now than you expect in retirement points to a Traditional IRA and its upfront deduction. Higher bracket later, or uncertainty, points to a Roth.
2. Check the deduction. If you are covered by a workplace plan and your income is above the phase-out range, a Traditional IRA contribution is nondeductible, which erodes much of its advantage over a Roth.
3. Check Roth eligibility. If your income is under the Roth limit, a Roth is often the simpler choice. If it is over, use the backdoor route.
4. Weigh flexibility. Roth contributions are accessible penalty-free before retirement and carry no RMDs. That flexibility matters more for younger savers and for anyone focused on estate planning.

When it is close, talk it through with a Certified Financial Planner who can model both against your actual numbers. Many people end up funding both over a career, which also gives them a mix of taxable and tax-free income to draw from in retirement.

Frequently asked questions

What is the main difference between a Roth IRA and a Traditional IRA?

The main difference is the timing of the tax. A Traditional IRA contribution may be deductible now, and your withdrawals in retirement are taxed as ordinary income. A Roth IRA contribution gives you no deduction now, but qualified withdrawals in retirement (after age 59 1/2 and five years) are entirely tax-free.

Who can contribute to a Roth IRA or a Traditional IRA?

Anyone with earned income can contribute to a Traditional IRA at any income. A Roth IRA has income limits: for 2026, direct contributions phase out between $153,000 and $168,000 of MAGI for single filers and between $242,000 and $252,000 for married couples filing jointly. Above those levels, a backdoor Roth is still available.

Can I deduct my Traditional IRA contributions on my taxes?

You can deduct the full contribution if neither you nor your spouse is covered by a workplace retirement plan, regardless of income. If one of you is covered, the deduction phases out over income ranges set by the IRS each year: for 2026, starting at $81,000 for a covered single filer and $129,000 for a covered joint filer.

Can I have both a Roth IRA and a Traditional IRA?

Yes. You can own and contribute to both in the same year, but your total contributions across all IRAs cannot exceed the annual limit, which is $7,500 for 2026 ($8,600 if you are 50 or older).

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