Choose a Roth if you expect a higher tax rate in retirement than today; choose Traditional if you expect a lower one. If your tax rate is the same then and now, both give the same after-tax result — the Roth wins only on flexibility and no required minimum distributions.
Key differences (2026)
| Roth IRA | Traditional IRA | |
|---|---|---|
| Tax on contributions | Paid now (no deduction) | Often deductible now |
| Tax on withdrawals | Tax-free if qualified | Taxed as income |
| 2026 contribution limit | $7,500 (+$1,100 if 50+) | $7,500 (+$1,100 if 50+) |
| Income limits | Phase-out for higher earners | Deduction phases out if covered by a workplace plan |
| Required minimum distributions | None for the owner | Yes, from age 73 |
A worked example
Contributing $7,500 a year for 30 years at 7% grows to about $708,456. With a Traditional IRA you would owe tax on withdrawals — at a 22% rate that leaves about $552,596, but you also saved 22% in tax each year you contributed. With a Roth, the full $708,456 is tax-free, but each contribution came from after-tax money. The winner depends on whether your tax rate is higher now or later.
Quick decision guide
- Early career, lower bracket now → Roth.
- Peak earning years, high bracket now → Traditional.
- Unsure → split contributions between both for tax diversification.
Project your balance with the roth ira calculator and retirement calculator. Rules summarised for 2026; confirm with the IRS or a tax professional.