Roth vs. Traditional IRA: Which Should You Choose?
The choice between a Roth and a Traditional IRA is really a single bet: will your tax rate be higher today or when you withdraw the money in retirement?
The mechanical difference
- Traditional IRA: contribute pre-tax (a deduction now), the balance grows tax-deferred, and you pay ordinary income tax on withdrawals in retirement.
- Roth IRA: contribute after-tax (no deduction now), but growth and qualified withdrawals are completely tax-free forever.
The rule of thumb
If your tax rate will be higher in retirement than today, choose Roth (pay the lower rate now). If it'll be lower, choose Traditional (deduct at the high rate now, pay the low rate later).
In practice: early-career and in the 12–22% brackets? Roth almost always wins — rates are low and you have decades of tax-free growth. Peak earning years in the 32–37% brackets? Traditional often wins. Unsure? Split contributions across both to diversify your future tax exposure.
2026 income limits
Roth contributions phase out at higher incomes: roughly $150,000–$165,000 (single) and $236,000–$246,000 (married filing jointly) for 2026. Traditional IRA deductibility also phases out if you're covered by a workplace plan.
The backdoor Roth
Earn too much for a direct Roth? The backdoor Roth is a legal, well-established workaround: contribute to a Traditional IRA (non-deductible), then convert it to Roth. Watch the pro-rata rule if you hold other pre-tax IRA balances — it can make the conversion partly taxable.
Where the IRA fits
In the financial order of operations, the IRA comes after your HSA and after capturing the full employer 401(k) match — but before maxing the rest of your 401(k).
Frequently asked questions
- Should I choose a Roth or Traditional IRA?
- Choose Roth if you expect a higher tax rate in retirement than today (common for younger or lower-bracket savers); choose Traditional if you expect a lower rate later (common in peak earning years). Splitting between both hedges the bet.
- What are the 2026 Roth IRA income limits?
- Roughly $150,000–$165,000 for single filers and $236,000–$246,000 for married filing jointly. Above the range you can use a backdoor Roth instead.
- What is a backdoor Roth IRA?
- A way for high earners to fund a Roth: contribute to a Traditional IRA with after-tax dollars, then convert it to Roth. Be mindful of the pro-rata rule if you have other pre-tax IRA money.