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.
Roth vs. Traditional IRA: Which is better?
The choice between a Roth and Traditional IRA comes down to one question: Will your tax rate in retirement be higher, the same or lower than today's? If higher in retirement, a Roth IRA allows you to pay taxes now at a lower rate and withdraw tax-free later as long as certain conditions are met. If lower in retirement, a Traditional IRA may allow you to take a deduction on your taxes now but withdrawals later are fully taxable.
Roth IRA vs. Traditional IRA: What are the key differences?
Roth and Traditional IRAs each offer unique benefits, making them suitable for different financial situations. Use the chart below to help decide which option may be right for you.
Roth IRA vs. Traditional IRA
| 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 |
| How do contributions grow? |
Tooltip
|
Tooltip |
| Are contributions tax-deductible? | No current-year Tooltip | Yes, provides immediate Tooltip (subject to income limitations for participants in employer-sponsored plans) |
| What type of contributions are allowed? | Tooltip or a Tooltip | Tooltip or after-tax dollars |
| What are max contribution limits for 2025? | $7,000 ($8,000 if over age 50) | $7,000 ($8,000 if over age 50) |
| What are max contribution limits for 2026? | $7,500 ($8,600 if over age 50) | $7,500 ($8,600 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 |
| Are there penalties for withdrawals? | Withdrawals are penalty- and tax-free after 5 years and Tooltip 1 | 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.
Roth IRA vs. Traditional IRA: Common questions
The main difference is when you receive the tax benefit.
With a Roth IRA, contributions are made with after-tax dollars, but qualified withdrawals in retirement can be taken tax-free when certain requirements are met. Roth IRAs also do not require minimum distributions during the account owner's lifetime.
With a Traditional IRA, contributions may be tax-deductible in the year they are made, which can provide an immediate tax benefit. However, withdrawals in retirement are generally taxed as ordinary income, and required minimum distributions typically apply starting at the applicable age.
Choosing between a Roth IRA and a Traditional IRA often depends on factors such as your income level, current tax situation, and long-term financial goals. Because each type of IRA offers different potential tax advantages, the right choice can vary from person to person.
Our Roth vs. Traditional IRA Calculator can help you compare the two options based on your income and assumptions about your future tax situation, helping you determine which type of IRA may make more sense for you.
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 2025 and 2026 Roth IRA Contribution Limits or 2025 and 2026 Traditional IRA Contribution Limits.
Withdrawals from a Roth IRA are penalty- and tax-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.
Yes. You can contribute to both a Roth IRA and a Traditional IRA in the same tax year, but your combined contributions across both accounts can't exceed the annual IRA contribution limit. Roth IRA contributions are also subject to income limits, while the deductibility of Traditional IRA contributions may depend on your income and workplace retirement plan coverage.
If your income is too high to contribute directly to a Roth IRA, anyone with earned income can contribute to a Traditional IRA, it just may not be deductible depending on your income and workplace retirement coverage. Some investors also consider a Roth conversion strategy, often called a backdoor Roth IRA, but taxes and pro-rata rules can make this more complex if you have other pre-tax IRA assets.
RMDs do not apply to Roth IRAs during the original account owner's lifetime. Beneficiaries who inherit a Roth IRA may still need to follow inherited IRA distribution rules.
Yes. You can convert all or part of a Traditional IRA to a Roth IRA, but the taxable portion of the conversion is generally included in your income for the year you convert it. A Roth conversion may be worth considering if you want potential tax-free qualified withdrawals later, but it's smart to understand the tax impact first.
The Roth IRA 5-year rule helps determine whether earnings can be withdrawn tax-free. In general, a qualified Roth IRA distribution must meet a 5-year holding period and another qualifying event, such as reaching age 59½. Roth conversions can also have their own 5-year rules, so timing matters when planning withdrawals.
