Roth IRA vs Traditional IRA: How They Differ (2026)

IRS-governed — offered at banks, brokerages, and robo-advisors

Roth IRA

Pay taxes now, withdraw tax-free in retirement — including all growth.

• 2026 contribution limit: $7,500 / $8,600 (50+)
• Tax treatment: After-tax contributions; tax-free withdrawals
• Income limits (2026): $153,000-$168,000 single / $242,000-$252,000 MFJ
• Required minimum distributions: None (original owner)

Pros

• Qualified withdrawals in retirement are completely tax-free — including decades of investment growth
• No required minimum distributions (RMDs) during the owner's lifetime
• Contributions (not earnings) can be withdrawn at any time without tax or penalty — flexible for emergencies
• Benefits most if your tax rate rises between now and retirement

Read IRS Publication 590-B →

IRS-governed — offered at banks, brokerages, and robo-advisors

Traditional IRA

Deduct contributions now (if eligible); pay taxes on withdrawals in retirement.

• 2026 contribution limit: $7,500 / $8,600 (50+)
• Tax treatment: Pre-tax (if deductible); taxable withdrawals
• Deduction income limits (2026): Phased out if covered by a workplace plan
• Required minimum distributions: Begin at age 73

Pros

• Possible current-year tax deduction if you or your spouse are not covered by a workplace retirement plan — or income is below the phase-out
• Reduces taxable income now, which benefits high earners who expect a lower rate in retirement
• No income ceiling on making non-deductible contributions (backdoor Roth strategy starts here)
• Same high annual contribution limit as Roth

Read IRS Publication 590-A →

The timing of the tax benefit is the core difference. A traditional IRA may give you a tax deduction on contributions now, and withdrawals in retirement are taxed as ordinary income. A Roth IRA taxes you on contributions now (no deduction), but qualified withdrawals in retirement — including all investment growth — come out completely tax-free. Roth IRAs also have no required minimum distributions (RMDs) during the owner's lifetime; traditional IRAs require distributions beginning at age 73 under the SECURE 2.0 Act. Source: IRS Publications 590-A and 590-B at irs.gov.

Yes, you can contribute to both in the same year, but your combined contributions to all IRAs cannot exceed the annual limit — $7,000 for 2026 ($8,000 if age 50 or older) under IRS Rev. Proc. 2025-18. Splitting contributions between a Roth and traditional IRA in the same year is allowed; you just cannot exceed the total annual cap across both accounts. Income limits apply separately: traditional IRA deductibility phases out based on income and workplace plan access, and Roth IRA direct contributions phase out for higher earners. Source: IRS at irs.gov.

This is an educational comparison, not financial advice. Structurally, a Roth IRA tends to benefit savers who are currently in a lower tax bracket than they expect to be in retirement — because paying taxes now (at the lower rate) and receiving tax-free withdrawals later is more valuable. Young earners early in their careers often meet this condition. The IRS publishes the deductibility rules for traditional IRAs and Roth IRA income limits in Publications 590-A and 590-B at irs.gov. A tax advisor can help model the comparison for a specific income and timeline.