Roth IRA vs. Traditional IRA

The main difference between a Roth IRA and a traditional IRA is when you pay taxes. With a traditional IRA, contributions may be tax-deductible now, and you pay income tax when you withdraw the money in retirement. With a Roth IRA, you contribute money you’ve already paid tax on, and qualified withdrawals in retirement are tax-free. If you expect your tax rate to be higher in retirement than it is today, a Roth usually comes out ahead; if you expect it to be lower, a traditional IRA usually does.

Both accounts share the same contribution limit, and each has its own rules about income, withdrawals and required distributions. Here’s how they compare, with the official 2026 figures and a worked example.

The 2026 contribution limits

For 2026, the IRS limit on IRA contributions is $7,500, up from $7,000 in 2025. If you’re 50 or older, you can add a catch-up contribution of $1,100, for a total of $8,600.

A few rules apply to both account types:

• The limit is shared. It covers all your traditional and Roth IRA contributions combined for the year.
• You need earned income. Generally, you can’t contribute more than your taxable compensation for the year, such as wages or self-employment income. A spouse with little or no income may be able to contribute based on the working spouse’s income if you file jointly.
• There’s a deadline. You can generally make contributions for a given year up until your tax return due date (not including extensions), which for 2026 contributions is in April 2027.

IRS Publication 590-A, Contributions to Individual Retirement Arrangements, covers these rules in detail.

Roth vs. traditional at a glance

Roth IRA income limits for 2026

Roth IRAs have an income cap. Your ability to contribute is reduced over a phase-out range based on your modified adjusted gross income, and disappears above it. For 2026, according to the IRS:

Below the range, you can contribute the full amount. Within it, your limit shrinks. Above it, you can’t contribute directly to a Roth IRA.

Traditional IRA deduction limits for 2026

Anyone with earned income can contribute to a traditional IRA, but whether you can deduct the contribution depends on whether you (or your spouse) are covered by a retirement plan at work. If neither of you is covered, the deduction isn’t limited by income. If you are covered, the IRS’s 2026 deduction phase-out ranges are:

If your income is above these ranges, you can still make a nondeductible traditional IRA contribution. You’d track it on IRS Form 8606 so that portion isn’t taxed again when you withdraw it.

A worked example: does a Roth or traditional IRA come out ahead?

Let’s compare the two accounts fairly, using the same out-of-pocket cost. Suppose your federal marginal tax rate today is 22%, and you invest for 30 years at a hypothetical 6% average annual return. Real returns vary year to year and aren’t guaranteed; this example is about taxes, not predicting the market.

Traditional IRA: You contribute $7,500 and deduct it, which saves you $1,650 in tax (22% of $7,500). Your real cost is $5,850. After 30 years, the account grows to $45,169.31. When you withdraw it, you pay income tax at your rate in retirement.

Roth IRA: To spend the same $5,850 out of pocket, you’d contribute $5,850 to a Roth. After 30 years it grows to $35,232.06, and qualified withdrawals are tax-free.

Here’s what you keep after tax under three possible retirement tax rates:

The pattern is clear:

• If your tax rate is the same later, both accounts leave you with exactly the same amount.
• If your rate is lower in retirement, the traditional IRA wins.
• If your rate is higher in retirement, the Roth wins.

A wrinkle: the contribution limit

In real life, many people contribute the full limit to whichever account they choose. A $7,500 Roth contribution would grow to $45,169.31 in this example, all of it tax-free. Because the limit is the same dollar amount for both, a full Roth contribution effectively shelters more money from future taxes. That only helps if you can afford to contribute the full amount with after-tax dollars.

You can model your own contributions and timeline in the compound interest calculator. For a refresher on why 30 years of growth multiplies your money so much, see how compound interest works.

Withdrawal rules to know

Traditional IRA. Withdrawals are taxed as ordinary income (except any nondeductible contributions). Taking money out before age 59½ generally triggers a 10% additional tax on top of income tax, unless you qualify for one of the IRS exceptions. You generally must begin required minimum distributions at age 73 (75 if you were born in 1960 or later).

Roth IRA. Your regular contributions come out first and can generally be withdrawn at any time without tax or penalty. Earnings are tax-free in a qualified distribution, which generally requires that at least five years have passed since the first tax year you contributed to a Roth IRA and that you’re 59½ or older, disabled, or meet another qualifying condition. Roth IRAs have no required minimum distributions during the original owner’s lifetime. IRS Publication 590-B, Distributions from IRAs, has the full ordering and qualification rules.

How to choose

A Roth IRA often makes sense if:

• You’re early in your career and expect your income to rise.
• Your current tax rate is relatively low.
• You value tax-free income and flexibility in retirement, including no required distributions.
• You want the option to access your contributions in an emergency, though keeping a separate emergency fund is better.

A traditional IRA often makes sense if:

• You’re in a high tax bracket now and expect a lower one in retirement.
• You qualify for the deduction and want to lower this year’s taxable income.
• Your income is too high to contribute to a Roth directly.

Not sure? Many people split contributions between the two, building both taxable and tax-free buckets for retirement. That gives you more options for managing taxes later.

What to put inside your IRA

Opening an IRA is only half the job; you also have to invest the money. Many people choose low-cost, diversified funds for long-term retirement savings. Our guide to index funds for beginners explains how they work and why fees matter.

The bottom line

Roth and traditional IRAs share the same 2026 contribution limit of $7,500 ($8,600 if you’re 50 or older), but they flip the timing of your tax break. A traditional IRA may cut your taxes now; a Roth IRA gives you tax-free qualified withdrawals later. As the example shows, if your tax rate stays the same, the two come out even, so the decision mainly comes down to whether you expect to pay a higher or lower rate in retirement, along with Roth income limits and the flexibility each account offers. Tax rules can be complex, so consider checking with a tax professional about your situation.

This content is for educational purposes only and isn't financial advice. Calculator results are estimates based on the numbers you enter. For decisions about your situation, consider talking with a qualified professional. Read our full disclaimer.