Traditional IRA vs Roth IRA
IRAs and 401(k)s follow the same Roth vs traditional logic — tax now or tax later — but the IRA versions have lower contribution limits, separate income phase-outs, and friendlier withdrawal rules. The Roth IRA in particular is the single most flexible retirement account in the US tax code.
| Factor | Traditional IRA | Roth IRA |
|---|---|---|
| 2026 contribution limit | $7,000 ($8,000 if 50+) | $7,000 ($8,000 if 50+) |
| Tax treatment | Deduction now, tax on withdrawal | Tax now, tax-free withdrawal |
| Income phase-out (single, 2026) | $77K–$87K (if covered by work plan) | $150K–$165K |
| Income phase-out (married, 2026) | $123K–$143K | $230K–$240K |
| Required minimum distributions | Yes, from age 73 | None during owner lifetime |
| Early withdrawal of contributions | Penalty + tax | Contributions out anytime, tax-free |
| First-time home purchase | Up to $10K penalty-free | Up to $10K of earnings tax-free + all contributions |
Choose Traditional IRA when…
You can take the tax deduction this year (income below phase-out) AND your current marginal bracket is at least 22%. Particularly useful when you have no workplace 401(k) and want to lock in the deduction.
Choose Roth IRA when…
Income is below the Roth phase-out, you are early in your career, you want emergency-fund flexibility (contributions are withdrawable anytime), or you want to avoid RMDs and pass tax-free wealth to heirs.
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Open the calculator →Frequently asked questions
What is a backdoor Roth IRA?
A workaround for high earners who exceed the Roth income phase-out. You contribute to a non-deductible Traditional IRA, then convert it to a Roth IRA. Watch the pro-rata rule if you have any pre-tax IRA balance — it can make the conversion partially taxable.
Can I contribute to both Roth IRA and Roth 401(k)?
Yes. They have separate limits ($7K IRA + $23,500 401(k) in 2026) and one does not reduce the other.
Roth IRA vs Roth 401(k) — which first?
Get employer match in the 401(k) first (free money). Then max the Roth IRA (better investment options, more flexibility). Then back to the 401(k) for additional contributions.