Roth IRA vs traditional IRA: what is the difference?

Traditional IRA deductions depend on your income and on whether you or your spouse are covered by a retirement plan at work. When you withdraw, the money is taxed as ordinary income.

Roth contributions use after-tax money. Qualified withdrawals, including the growth, are tax-free, but the qualification rules apply, so check them before you plan around a withdrawal.

For 2026 the IRA contribution limit is $7,500, plus a $1,100 catch-up at age 50 or older, for $8,600. The limit is combined across your traditional and Roth IRAs, and you also need earned income.

Roth IRA eligibility phases out between $153,000 and $168,000 of income for single filers and heads of household, and between $242,000 and $252,000 for married couples filing jointly.

A traditional IRA deduction can shrink if you are covered by a workplace plan. For 2026 the phase-out is $81,000 to $91,000 for single filers and $129,000 to $149,000 for joint filers when the contributing spouse is covered.

If you expect a lower tax bracket in retirement than today, traditional tends to come out ahead. If you expect a similar or higher bracket, Roth tends to. At the same bracket the two end up equal.

Nobody knows their retirement bracket. Many people split contributions between both types to hedge that uncertainty.

A simple comparison ignores state tax, changes in tax law, required minimum distributions, Social Security taxation and Medicare surcharges, all of which affect which account you would have preferred.

A Roth conversion, which moves pretax savings into a Roth, generally creates taxable income and cannot be undone. Roth conversions have not been reversible since 2018.