The core difference in one table
Both accounts hold the same investments: index funds, ETFs, stocks, bonds or CDs. The difference is when the IRS takes its share.
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Tax break | Contributions may be deductible now | No deduction; qualified withdrawals are tax-free |
| Growth | Tax-deferred | Tax-free if withdrawals are qualified |
| 2026 contribution limit | $7,500 combined across all your IRAs, plus $1,100 catch-up at 50+ (or 100% of compensation, if less) | |
| Income limit to contribute | None (but deductibility can phase out) | Phases out at $153,000–$168,000 (single) and $242,000–$252,000 (married filing jointly) |
| Age limit to contribute | None since 2020 | None |
| Required minimum distributions | Yes, starting at 73 (75 for people born after 1959) | None during the owner’s lifetime |
| Early access to contributions | Taxable, plus 10% penalty before 59½ unless an exception applies | Your own contributions can come out any time, tax- and penalty-free |
Source: IRS IR-2025-111; Capital Group IRA comparison table (2026 figures).
You need earned income to contribute to either account. A spouse without earnings can contribute based on the working spouse’s income if you file jointly. The deadline for 2026 contributions is the April 15 tax-filing deadline in 2027.
2026 Roth IRA income limits
Roth eligibility is based on your modified adjusted gross income (MAGI). Below the range you can contribute the full amount. Inside it, your allowed contribution shrinks. Above it, you can’t contribute directly.
| Filing status | 2025 phase-out range | 2026 phase-out range |
|---|---|---|
| Single or head of household | $150,000–$165,000 | $153,000–$168,000 |
| Married filing jointly | $236,000–$246,000 | $242,000–$252,000 |
| Married filing separately | $0–$10,000 | $0–$10,000 |
Source: IRS IR-2025-111, November 13, 2025.
2026 traditional IRA deduction limits
Anyone with earned income can contribute to a traditional IRA. Whether you can deduct it depends on two things: whether you (or your spouse) are covered by a workplace retirement plan such as a 401(k), and your MAGI. If neither of you is covered, the full contribution is deductible at any income.
| Your situation | 2026 deduction phase-out (MAGI) |
|---|---|
| Single, covered by a workplace plan | $81,000–$91,000 |
| Married filing jointly, you are covered | $129,000–$149,000 |
| Married filing jointly, you are not covered but your spouse is | $242,000–$252,000 |
| Married filing separately, covered | $0–$10,000 |
Source: IRS IR-2025-111, November 13, 2025.
This creates a common trap. A single 401(k) participant earning $95,000 gets no deduction for a traditional IRA contribution. That money still grows tax-deferred, but its earnings are taxed on the way out. For most people in that spot, a Roth IRA (if they qualify) is the cleaner choice, because a nondeductible traditional IRA gives you the downside of both: no deduction now and taxable growth later.
Tax now vs. tax later: worked examples
The decision comes down to your marginal tax rate today compared with the rate you expect to pay on withdrawals. Here are the 2026 federal brackets that matter most for IRA savers.
| Rate | Single (taxable income over) | Married filing jointly (over) |
|---|---|---|
| 12% | $12,400 | $24,800 |
| 22% | $50,400 | $100,800 |
| 24% | $105,700 | $211,400 |
| 32% | $201,775 | $403,550 |
Source: IRS Revenue Procedure 2025-32. Standard deduction for 2026: $16,100 single, $32,200 married filing jointly.
Example 1: Same tax rate now and later
Say you’re single, in the 22% bracket, and eligible to deduct a traditional IRA contribution. You put in $7,500 and save $1,650 in federal tax this year. Assume a hypothetical 7% annual return for 30 years. The account grows to about $57,092.
- Traditional: If you withdraw it at a 22% rate, you keep about $44,532.
- Roth, same out-of-pocket cost: The traditional contribution really cost you $5,850 after the tax saving. Put $5,850 into a Roth instead and it grows to about $44,532, all tax-free.
Same rate, same result. The math is symmetrical. That’s why the tax rate gap is what decides it.
Example 2: Lower rate in retirement
Same $57,092 traditional balance, but your retirement income puts you in the 12% bracket. You keep about $50,241, roughly $5,700 more than the equivalent Roth. Traditional wins when your rate drops.
Example 3: Higher rate in retirement
If pensions, required distributions and Social Security push you into the 24% bracket, the traditional account nets about $43,390. The equal-cost Roth still delivers $44,532. Roth wins when your rate rises.
Why maxing out a Roth often comes out ahead
The examples above compare equal after-tax costs. In practice, the $7,500 limit is the same for both accounts. A full $7,500 Roth contribution is worth more than a $7,500 traditional contribution because no tax is owed later. If you can afford to max out and you would not have invested the traditional IRA tax savings, Roth shelters more money.
Returns are hypothetical and for illustration only. Actual returns vary and can be negative. State income tax can tilt the comparison, especially if you plan to move between a high-tax and a no-income-tax state.
Required minimum distributions
Traditional IRAs force withdrawals once you reach your required beginning age: 73 under current law, rising to 75 for people born after 1959. Your first required minimum distribution (RMD) is due by April 1 of the year after you reach that age, and later ones by December 31 each year. Delaying the first one means taking two in the same year, which can push you into a higher bracket.
Missing an RMD triggers a 25% excise tax on the shortfall, reduced to 10% if you correct it within the correction window. Roth IRAs have no RMDs during the owner’s lifetime. Since 2024, Roth accounts inside 401(k) and 403(b) plans don’t either. That makes a Roth IRA useful if you may not need the money, or want to leave it to heirs. Beneficiaries generally must empty an inherited Roth within 10 years, but qualified withdrawals stay tax-free.
The Roth five-year rules
There are two separate clocks, and they confuse almost everyone.
- The earnings clock. To withdraw earnings tax-free, five tax years must have passed since January 1 of the year of your first Roth IRA contribution, and you must be 59½, disabled, using up to $10,000 for a first home, or the money must go to a beneficiary after death. The clock starts once and never restarts. A contribution for tax year 2026, even if made in April 2027, starts the clock on January 1, 2026.
- The conversion clock. Each conversion from a traditional IRA has its own five-year period. Withdraw converted money before that period ends while under 59½, and the 10% additional tax may apply to the taxable amount converted.
Roth withdrawals come out in a fixed order: your regular contributions first (always tax- and penalty-free), then conversions oldest first, then earnings. Because of this order, most people who withdraw only what they put in owe nothing. One practical move: open a Roth with even a small contribution as early as possible to start the earnings clock.
Backdoor Roth basics
If your income is above the Roth phase-out range, you can’t contribute directly, but conversions have no income limit. The “backdoor” works in three steps:
- Make a nondeductible contribution to a traditional IRA.
- Convert that money to a Roth IRA.
- Report both on IRS Form 8606, which tracks your after-tax basis so it isn’t taxed twice.
The catch is the pro-rata rule. The IRS treats all your traditional, SEP and SIMPLE IRA balances as one pot. If you have $67,500 of pre-tax IRA money and add a $7,500 nondeductible contribution, only 10% of any conversion is tax-free. The other 90% is taxable. The backdoor is cleanest when you have no other pre-tax IRA balances. A tax professional can help you check this before you convert.
How to decide
Use these questions in order.
- Are you getting your full 401(k) match? A match usually beats any IRA tax break. See our 401(k) guide for how matches and vesting work.
- Can you deduct a traditional contribution? If you’re covered at work and above the deduction range, the traditional deduction is gone and Roth (direct or backdoor) is usually the better fit.
- What’s your bracket now? At 10% or 12%, Roth contributions lock in a low rate. At 32% or higher, the traditional deduction is worth a lot, as long as you expect lower income in retirement.
- Do you value flexibility? Roth contributions can come out any time, and there are no lifetime RMDs. That flexibility has value if your future is uncertain, but an IRA isn’t a substitute for an emergency fund.
- Do you want tax diversification? Nobody knows future tax rates. Holding some pre-tax and some Roth money lets you choose which to draw from each year in retirement.
You can also split one year’s $7,500 between both types. Lower-income savers should check the Saver’s Credit: for 2026 it’s available up to $40,250 of income for single filers, $60,375 for heads of household and $80,500 for joint filers.
Where to open an IRA and what to buy
Brokerages, banks and robo-advisors all offer both account types. Compare fees, minimums and fund choices in our best stock brokers guide. Inside the account, many long-term savers use low-cost broad funds; our guide to S&P 500 index funds compares expense ratios. A common mistake is depositing money into an IRA and leaving it in cash. Check that your contribution is actually invested.
Frequently asked questions
Can I contribute to both a Roth IRA and a traditional IRA in 2026?
Yes. The $7,500 limit ($8,600 at 50 or older) applies to all your IRAs combined, so you can split it between the two types in any proportion.
What happens if I contribute to a Roth IRA and my income ends up too high?
You have an excess contribution. You can withdraw it and its earnings by your tax-filing deadline (including extensions), recharacterize it as a traditional IRA contribution, or apply it to a later year's limit. Left in place, excess contributions face a 6% tax each year they remain.
Can I withdraw Roth IRA money before 59½?
Your regular contributions can come out at any time without tax or penalty. Earnings withdrawn early are generally taxable and may face a 10% penalty unless an exception applies, such as up to $10,000 for a first home after the five-year period.
Is a backdoor Roth legal?
Yes. Conversions have had no income limit since 2010, and the strategy is widely used. You must report it on Form 8606, and the pro-rata rule can make part of the conversion taxable if you hold other pre-tax IRA money.
Do I need a 401(k) to open an IRA?
No. Anyone with earned income can open an IRA. Having a workplace plan only affects whether a traditional IRA contribution is deductible.
When is the deadline for 2026 IRA contributions?
You can contribute for 2026 until the tax-filing deadline in April 2027. Extensions to file don't extend the contribution deadline.
Sources
- IRS – 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111)
- CPA Practice Advisor – IRS adjusts tax brackets, standard deduction for 2026 (Rev. Proc. 2025-32)
- Capital Group – IRA comparison table
- Pullman & Comley – SECURE Act 2.0 changes to required minimum distributions
- Schneider Downs – RMD rules for 2026
- Empower – What is the five-year rule for a Roth IRA?
- Lord Abbett – Five-year rule: important information on Roth IRA conversions
- Stash – Backdoor Roth IRA
Rates, fees and terms change often. Figures were checked in October 2026; confirm current details with the provider before you apply.