Traditional IRA vs. Roth IRA: Which Is the Right Choice for You?

Saving for retirement shouldn’t be an afterthought; it’s a necessity. And one of the best ways to do so efficiently is to take advantage of retirement accounts, which offer tax breaks. While a 401(k) is the most common retirement account, it’s not the only one. Individual retirement accounts (IRAs) are another great option and offer benefits that you don’t receive with a 401(k).

There are two types of IRAs: traditional and Roth. While you can contribute to both, it’s generally better to focus on one. But which one is the right choice for you? Well, that depends.

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The difference between a traditional IRA and a Roth IRA

The main difference between a traditional IRA and a Roth IRA is the “type” of money you contribute to them.

Contributions to a traditional IRA are often tax-deductible, with some exceptions based on income limits and retirement-plan coverage at work. This reduces your taxable income for the year you make the contributions, but you’ll owe taxes on the withdrawals you make in retirement (as with a 401(k)).

You can’t deduct your contributions to a Roth IRA, but your withdrawals are tax-free in retirement. This unique benefit can easily save you thousands in taxes.

In 2026, the maximum total amount you can contribute to one or more IRAs is $7,500, or $8,600 if you’re 50 or older.

Not everyone is eligible to contribute to a Roth IRA

An important note about Roth IRAs is the income limit for contribution eligibility. If you’re single, you can’t contribute to a Roth IRA if your income is above $168,000. If your income is between $153,000 and $168,000, you can contribute something, but not the full $7,500 or $8,600. Earning less than $153,000 means you can contribute the full amount.

If you’re married and filing jointly, the phaseout range is $242,000 to $252,000. Below that, you can contribute the full amount; above that, you can’t contribute any.

Which account type is better for you?

Deciding between a traditional IRA and a Roth IRA generally comes down to when you want to pay taxes.

If you’re likely in your highest-earning years, going with a traditional IRA makes sense because you get the upfront tax break (assuming you qualify) and then pay taxes in retirement, when you’re likely to be in a lower tax bracket.

If you’re likely to be in a higher tax bracket in retirement, going with a Roth IRA makes sense because you pay taxes upfront in the lower tax bracket and then have tax-free withdrawals in retirement.