Roth IRA vs Traditional IRA: Which Is Better for Your Retirement?

Roth IRA vs Traditional IRA: Which Is Better for Your Retirement?

Both IRAs offer tax advantages for retirement savings. The key difference is when you pay taxes — and the right choice depends on your current income and where you expect to be in retirement.

The Fundamental Difference

Roth IRA: You contribute after-tax dollars. Your money grows tax-free, and qualified withdrawals in retirement are completely tax-free. Traditional IRA: You may be able to deduct contributions from your current taxable income. Your money grows tax-deferred, but withdrawals in retirement are taxed as ordinary income.

2026 Contribution Limits

The contribution limit is $7,000 per year ($8,000 if you are age 50 or older). This limit is shared across all your IRAs — you cannot contribute $7,000 to a Roth and $7,000 to a Traditional in the same year.

Roth IRA Income Limits

Roth IRA contributions phase out for single filers at $146,000-$161,000 MAGI, and for married filing jointly at $230,000-$240,000. Above these limits, you cannot contribute directly to a Roth IRA.

Traditional IRA Deductibility

Traditional IRA contributions are always allowed regardless of income, but the deductibility phases out if you (or your spouse) have a workplace retirement plan. The phase-out range for single filers with a workplace plan starts at $77,000.

The Key Decision Framework

Choose Roth if: you are young or in a lower tax bracket now than you expect in retirement, you want tax-free income in retirement, or you want to avoid required minimum distributions (Roth IRAs have no RMDs). Choose Traditional if: you are in your peak earning years with high current income, you expect to be in a lower tax bracket in retirement, and you want the immediate tax deduction.

The Backdoor Roth Strategy

High earners above the Roth income limits can use the backdoor Roth: contribute to a non-deductible Traditional IRA, then immediately convert to a Roth. This is legal and widely used.