I opened a Roth IRA in 2021. Then I panicked and opened a Traditional IRA in 2022. Then I spent a week researching which one I should actually use. Here's what I found — simplified to the point where you can decide in 2 minutes.
The 30-Second Difference
- Traditional IRA: Tax deduction today (you pay less tax now). You pay tax when you withdraw in retirement.
- Roth IRA: No tax deduction today. You pay tax on this year's income. But withdrawals in retirement are completely tax-free.
Both grow tax-free while invested. The difference is when you pay the tax: now (Roth) or later (Traditional).
Which One Should You Pick?
Pick Roth if: You're early in your career, your income is lower than it will be in the future, and you expect to be in a higher tax bracket when you retire. Most people under 35 should choose Roth.
Pick Traditional if: You're in a high tax bracket now (32%+), you expect to be in a lower bracket in retirement, or you need the tax deduction to free up cash for investing.
Pick both if: You're in the middle (22-24% bracket) and can contribute to both. Having both gives you flexibility in retirement — you can withdraw from the Traditional up to the standard deduction amount (tax-free), then use Roth for the rest.
Income Limits
| Traditional IRA | Roth IRA | |
|---|---|---|
| 2026 Contribution Limit | $7,000 ($8,000 if 50+) | $7,000 ($8,000 if 50+) |
| Income Limit (phase-out starts) | None (if no workplace plan) | $150k single / $236k married |
| Deductible if you have 401k | Phase-out at $73k single | N/A |
The "Backdoor Roth" Trick
If you earn too much to contribute directly to a Roth IRA, you can do a backdoor Roth: contribute to a Traditional IRA (non-deductible), then convert it to a Roth IRA. There's no income limit on conversions. It takes 15 minutes and most brokers walk you through it. If your income is over $150k (single) or $236k (married), Google "backdoor Roth IRA" and your broker's name.
Once you've picked your IRA, use our Compound Interest Calculator to see how tax-free growth compounds over 30 years.