Traditional IRA vs. Roth IRA: differences and how to choose
Traditional vs. Roth IRA: how taxes work, 2026 contribution and income limits, withdrawal rules and questions to help you choose.
Quick answer
With a traditional IRA, your contribution may be deductible today and you pay taxes when you withdraw. With a Roth IRA, you contribute money that has already been taxed and qualified retirement withdrawals are tax-free. In 2026 you can contribute up to $7,500 across all your IRAs ($8,600 if you are 50 or older), and Roth IRAs have income limits.
Key takeaways
- Traditional IRA: possible deduction now, taxes when you withdraw.
- Roth IRA: no deduction now, qualified withdrawals are tax-free.
- 2026 limit: $7,500 across all IRAs; $1,100 extra from age 50.
- Roth IRAs have income limits: in 2026 the phase-out is $153,000 to $168,000 (single).
An IRA (Individual Retirement Arrangement) is a retirement account you open on your own at a bank, brokerage or other institution, whether or not you have a plan at work. There are two main types: traditional and Roth.
The differences in one table
| Traditional IRA | Roth IRA | |
|---|---|---|
| Taxes when you contribute | Contribution may be deductible | Not deductible |
| Taxes on retirement withdrawals | Taxed as income | Qualified withdrawals are tax-free |
| Income limit to contribute | None, but the deduction may be reduced if you have a workplace plan | Yes (see below) |
| Required minimum distributions | Yes, from a certain age | None during the owner’s lifetime |
2026 limits
- Maximum contribution: $7,500 in total across all your IRAs.
- Catch-up from age 50: $1,100 (total $8,600).
- You cannot contribute more than your earned income for the year.
2026 Roth IRA income limits (modified adjusted gross income):
| Filing status | Phase-out range |
|---|---|
| Single or head of household | $153,000 to $168,000 |
| Married filing jointly | $242,000 to $252,000 |
Above the top of the range, you cannot contribute directly to a Roth IRA.
Traditional IRA deduction if you have a workplace plan (2026): phases out between $81,000 and $91,000 for single filers, and between $129,000 and $149,000 for married couples filing jointly when the contributing spouse has a workplace plan.
Which one fits you?
There is no single answer, but these questions help:
- Do you expect a higher tax rate in retirement than today? A Roth often has the edge.
- Do you need to lower this year’s taxes? A traditional IRA can help if the contribution is deductible.
- Are you early in your career with moderate income? Many people choose Roth at that stage.
- Do you already have a traditional 401(k)? A Roth IRA can diversify how you will pay taxes in the future.
If your employer offers a 401(k) match, it usually makes sense to get the full match first. See what is a 401(k).
Early withdrawals
Withdrawing before age 59½ can trigger taxes and a 10% additional tax, with exceptions. With a Roth IRA, contributions (not earnings) can usually be withdrawn without tax or penalty, but the rules have details: check the IRS publication or talk to a professional.
See the effect of time
With the compound interest calculator you can see how much an annual contribution could grow over the years.
General information, not investment or tax advice. Figures are IRS limits for 2026.
Frequently asked questions
What is the main difference between a traditional IRA and a Roth IRA?
When you pay taxes. With a traditional IRA, the contribution may be deductible now and you pay taxes on withdrawals. With a Roth IRA, you pay taxes before contributing and qualified retirement withdrawals are tax-free.
How much can I contribute to an IRA in 2026?
Up to $7,500 in total across all your traditional and Roth IRAs, or $8,600 if you are 50 or older. You cannot contribute more than your earned income for the year.
Who can contribute to a Roth IRA?
It depends on income. In 2026, the ability to contribute phases out between $153,000 and $168,000 of modified adjusted gross income for single filers and heads of household, and between $242,000 and $252,000 for married couples filing jointly.
Can I have a 401(k) and an IRA at the same time?
Yes. But if you or your spouse are covered by a workplace retirement plan, the traditional IRA deduction may be reduced depending on your income.
Sources
- 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 Internal Revenue Service
- Traditional and Roth IRAs Internal Revenue Service
This article is general and educational; it is not personalized financial, legal or tax advice. Financial product terms change: always confirm current terms with the institution.