Investing
Roth IRA vs Traditional IRA: Which Is Right for You?
Both Roth and Traditional IRAs are powerful retirement savings tools — but they're taxed very differently. Choosing the right one depends mainly on whether you expect to be in a higher or lower tax bracket in retirement.
The Core Difference
- Traditional IRA: Contribute pre-tax dollars, pay taxes when you withdraw in retirement
- Roth IRA: Contribute after-tax dollars, pay NO taxes on withdrawals in retirement
| Traditional IRA | Roth IRA | |
|---|---|---|
| Tax on contributions | Deductible now | No deduction |
| Tax on withdrawals | Taxed as income | Tax-free |
| RMDs at 73? | Yes | No |
| Income limits (2024) | None (deductibility phases out) | $161k (single) / $240k (married) |
| Contribution limit | $7,000 ($8,000 if 50+) | $7,000 ($8,000 if 50+) |
General Rule of Thumb
- Choose Roth if you're young, in a low tax bracket now, or expect higher taxes in retirement
- Choose Traditional if you're in a high tax bracket now and expect a lower bracket in retirement
- Do both if possible — tax diversification in retirement is valuable
For most young workers in their 20s–30s, the Roth IRA wins — you lock in today's lower tax rate and all future growth is completely tax-free.
Project Your Retirement Savings
Use our compound interest calculator to see how IRA contributions grow.
Calculate →