Traditional vs. Roth IRA: what's the difference?

The core difference is when you pay taxes: a traditional IRA gives you a potential tax deduction today but taxes withdrawals in retirement; a Roth IRA offers no upfront deduction but tax-free qualified withdrawals later.

Both account types are individual retirement arrangements governed by the IRS, and they share the same annual contribution limits. The biggest difference is timing: when do you pay the tax on the money?

Tax treatment side by side

Traditional IRA — contribute pre-tax: Contributions may be tax-deductible depending on income and workplace-plan participation. Earnings grow tax-deferred. Withdrawals in retirement are taxed as ordinary income.
Roth IRA — contribute after-tax: Contributions are never deductible. Earnings grow tax-free. Qualified withdrawals (age 59½+, account open 5+ years) are completely tax-free.

Required minimum distributions (RMDs)

Traditional IRA owners must begin taking RMDs by April 1 of the year after they turn 73 (under current law). Roth IRA original owners face no RMDs during their lifetime, giving more flexibility on when and how much to withdraw.

Income limits and who qualifies

Anyone with earned income can contribute to a traditional IRA, though the deduction phases out at higher incomes if you (or a spouse) are covered by a workplace plan. Roth IRA direct contributions phase out based on MAGI and filing status. The IRS publishes the current ranges; see IRS Traditional and Roth IRAs.

IRS-sourced comparison facts

Traditional IRA deductible contributions and earnings are taxable when withdrawn; Roth IRA qualified distributions are not includible in gross income. — IRS — Traditional and Roth IRAs
Roth IRA owners are not required to take minimum distributions during their lifetime; traditional IRA owners must begin RMDs at age 73. — IRS
Traditional and Roth IRAs share the same annual contribution limit, set by the IRS. — IRS — IRA Contribution Limits

Key takeaways

Traditional IRAs: potential upfront deduction, taxed on the way out. Roth IRAs: no deduction, tax-free on qualified withdrawal.
Traditional IRAs require minimum distributions starting at 73; Roth IRAs do not (for the original owner).
Roth contributions phase out at higher incomes; traditional contributions are always allowed (deductibility may phase out).
Both share the same IRS annual contribution limit. Consult a qualified tax advisor about your situation.