Choosing between a Traditional and a Roth IRA comes down to one question: will your tax rate be higher now, or in retirement?
Both accounts help you save for retirement, but they tax you at opposite ends. Get the timing right and you keep more of your money. Get it wrong and you pay tax at the higher rate.
How a Traditional IRA works
You contribute pre-tax money, so your contributions may lower your taxable income now. You pay tax later, when you withdraw in retirement. Traditional withdrawals also face required minimum distributions (RMDs) — the IRS requires you to start withdrawing from a certain age, whether you need the money or not.
How a Roth IRA works
You contribute after-tax money, so there is no tax break now. Qualified withdrawals in retirement are tax-free, and Roth IRAs do not face RMDs during your lifetime.
The comparison, in one line
- Lower tax rate in retirement than now: Traditional usually wins.
- Higher tax rate in retirement than now: Roth usually wins.
- Same rate in both periods: they tie.
That tie is not a guess. If you set aside the same amount before tax each year, a Traditional contribution goes in whole while the Roth contribution goes in after tax at your current rate — so when both rates are equal, the after-tax outcomes match exactly. The verdict follows the rate difference.
For example, setting aside $7,000 a year from age 30 to 65 at a 7% yearly return gives $754,773 after tax in both accounts when the rate is 22% now and 22% in retirement. Drop the retirement rate to 12% and Traditional wins by $96,766. Raise it to 32% and Roth wins by the same amount.
2026 contribution limits
For 2026, the IRS limit is $7,500, or $8,600 if you are 50 or older.
Run your own numbers
Try the free Traditional vs Roth IRA Calculator
Enter your ages, yearly set-aside, tax rates now and in retirement, and expected return. It shows both after-tax totals side by side, with the RMD note, so you can see which account wins for your situation. Free, online, no signup needed.
Frequently asked questions
Can I have both a Traditional and a Roth IRA?
Yes. You can hold both, but the combined contributions across your IRAs still count against the yearly limit above.
What if I do not know my retirement tax rate?
Run both scenarios. The calculator shows the Traditional total, the Roth total, and the difference, so you can see how much the answer depends on that one rate.
Do Roth IRAs really have no RMDs?
Roth IRAs do not face required minimum distributions during your lifetime. Traditional IRAs do — that is one of the real differences the calculator flags.
