📋 Table of Contents
Roth IRA vs. Traditional IRA
Both account types offer tax-advantaged retirement savings, but the timing of the tax benefit differs — Roth is taxed now with tax-free withdrawals later, Traditional is deducted now with taxed withdrawals later.
Key Differences
| Factor | Roth IRA | Traditional IRA |
|---|---|---|
| Contribution tax treatment | After-tax | Pre-tax (deductible) |
| Withdrawal tax treatment | Tax-free (qualified) | Taxed as ordinary income |
| RMDs | None during owner's lifetime | Required starting age 73 |
Which Should You Choose?
Choose Roth if: you expect to be in a similar or higher tax bracket in retirement, or want to avoid RMDs. Choose Traditional if: you want an immediate tax deduction now and expect a lower tax bracket in retirement.
You Can Have Both
Many savers contribute to both types over their career (subject to the combined annual limit), providing tax diversification — flexibility to draw from either account based on your tax situation in any given retirement year.
Common Mistakes
Assuming one type is universally "better" — the right choice depends on your specific tax situation now versus your expected situation in retirement, which is inherently uncertain.
Frequently Asked Questions
Neither is universally better — it depends on whether you expect your tax rate to be higher now (favor Traditional) or later in retirement (favor Roth).
Yes, but your combined contributions across both accounts cannot exceed the annual IRA limit ($7,000 under 50, $8,000 for 50+ in 2025).