Roth IRA vs. Traditional IRA
Choosing between a Roth IRA and a Traditional IRA is an important step in building a retirement plan that works for you.
Before you choose: What to know about IRAs
An IRA (Individual Retirement Account) is a powerful tool for saving for the future, offering tax advantages that can grow your money over time.
While both Roth and Traditional IRAs are designed to help you save for retirement, they differ in how and when you get tax advantages.
The charts below outline the key differences to help you decide which option best fits your situation.
Overview
Overview
| Roth IRA | Traditional IRA | |
|---|---|---|
| Who is the account best suited for? | Individuals expecting to be in a higher tax bracket at the Tooltip | Individuals expecting to be in the same or lower tax bracket at the Tooltip |
| What are the primary tax benefits? | Tax-free withdrawals in the future and no required minimum distributions when certain requirements are met | Immediate tax benefits on contributions |
Contributions
Contributions
| Roth IRA | Traditional IRA | |
|---|---|---|
| What type of contributions are allowed? | Tooltip or a Tooltip | Tooltip or after-tax dollars |
| What are max contribution limits for 2024/2025? | $7,000 ($8,000 if over age 50) | $7,000 ($8,000 if over age 50) |
| Who is eligible to contribute? | Those with earned income below a certain level | Anyone with earned income |
| Are there age restrictions for contributions? | No | No |
Withdrawals
Withdrawals
| Roth IRA | Traditional IRA | |
|---|---|---|
| Are there penalties for withdrawals? |
Withdrawals are penalty- and tax-free after 5 years and
Tooltip
|
Withdrawals are taxed as current income but penalty-free after age 59½² |
| Are required minimum distributions (RMDs) necessary? | No | Yes, starting at age 73 |
Need more help choosing?
Read Roth vs. Traditional IRA: Which Is Right For You? for more information on requirements, eligibility, and contribution limits.
Common questions
Eligibility to contribute to a Roth IRA is based on your income level, while Traditional IRA contributions are not limited by how much you make annually.
Review more details about 2024-2025 Roth IRA Contribution Limits or 2024-2025 Traditional IRA Contribution Limits.
You can have both a Roth IRA and a Traditional IRA. However, the combined annual contribution limit applies to both accounts together, not separately.
Review more details about 2024-2025 Roth IRA Contribution Limits or 2024-2025 Traditional IRA Contribution Limits.
Withdrawals from a Roth IRA are tax- and penalty-free as long as you're at least 59½ and your account has been open for at least five years.
Withdrawals from a Traditional IRA are penalty-free once you're 59½, but the money you take out is taxed as ordinary income.
Review more details about Roth IRA withdrawal rules and Traditional IRA withdrawal rules.