Choosing between a Roth IRA and a traditional IRA is one of the most common retirement questions in the US — and the answer comes down to one thing: when you want to pay tax. With a Roth you pay tax now and withdraw tax-free later; with a traditional IRA you usually get a tax break now and pay tax when you withdraw.

The 2026 limits — the same for both

  • Contribution limit: $7,500 for 2026 if you are under 50, or $8,600 if you are 50 or older ($1,100 catch-up) — this limit covers all your traditional and Roth IRAs combined, not per account
  • Deadline: contributions for 2026 can be made until 15 April 2027
  • Earned income rule: you need taxable compensation (wages or self-employment income) at least equal to what you contribute
  • These figures come from IRS Notice 2025-67

Roth IRA: pay tax now, never again

  • Contributions are made with after-tax money — no tax deduction today
  • Money grows tax-free, and qualified withdrawals in retirement are completely tax-free
  • There are no required minimum distributions (RMDs) for the original owner during their lifetime
  • Income limits apply: in 2026, single filers can make a full contribution only if their modified adjusted gross income (MAGI) is under $153,000; the limit phases out between $153,000 and $168,000, and there is no direct contribution at $168,000 or more
  • For married couples filing jointly: full contribution under $242,000 MAGI, phasing out between $242,000 and $252,000

Traditional IRA: tax break now, tax later

  • Contributions are often tax-deductible in the year you make them, depending on your income and whether you have a workplace retirement plan
  • Money grows tax-deferred, but withdrawals in retirement are taxed as ordinary income
  • Required minimum distributions (RMDs) begin at age 73 (for most people)
  • No income limit on contributing — anyone with earned income can contribute, though the deduction may be limited

Which one fits you?

  • Pick a Roth if you expect your tax rate to be higher in retirement than it is now — typically younger workers and people in lower tax brackets today
  • Pick a traditional IRA if you expect your tax rate to be lower in retirement, or you want the tax deduction now
  • Many people split contributions between the two — the $7,500 limit is combined, so you can put part in each

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