This is general information, not investment or tax advice. Limits change yearly — confirm current figures at IRS.gov.

An individual retirement account (IRA) is a tax-advantaged way to save for retirement on your own, outside a workplace 401(k). For 2026 you can contribute up to $7,500, plus a $1,100 catch-up if you're 50 or older, the IRS says. The bigger decision is which type to use.

The core difference: when you're taxed

Traditional IRA: contributions may be tax-deductible now, the money grows tax-deferred, and withdrawals in retirement are taxed as ordinary income. You get the break upfront and pay the tax later.

Roth IRA: contributions are made with after-tax dollars (no deduction today), but qualified withdrawals in retirement — including all the growth — are completely tax-free. You pay now and owe nothing later. A withdrawal is "qualified" once you're 59½ and the account has been open at least five years.

The question that decides it

Will your tax rate be higher now or in retirement? If you expect it to be lower later — common for high earners in their peak years — the traditional IRA's upfront deduction wins. If you expect it to be higher later — common for younger savers early in their careers, or anyone who thinks rates will rise — the Roth wins. When you genuinely can't tell, the two can hedge each other.

Income limits to know

These gates matter, and the IRS adjusts them yearly:

  • Roth contributions phase out by income (modified AGI): for 2026, roughly $153,000–$168,000 for single filers and $242,000–$252,000 for married couples filing jointly. Above the top, you can't contribute directly.
  • Traditional IRA deductions phase out only if you (or a spouse) are covered by a workplace plan — for a covered single filer, about $81,000–$91,000 in 2026. Anyone can still contribute to a traditional IRA, but above the limit it's non-deductible, which changes the math versus a Roth.

Two more differences that matter

Required minimum distributions (RMDs) are mandatory annual withdrawals the government eventually forces from tax-deferred accounts so it can collect its tax. Traditional IRAs face them starting at age 73. Roth IRAs have no RMDs during the original owner's lifetime — a real edge if you don't need the money and want it to keep compounding or pass to heirs.

Access: both generally charge a 10% penalty on withdrawals before 59½. But because Roth contributions were already taxed, you can withdraw them (not the earnings) anytime, tax- and penalty-free — useful flexibility.

Practical notes

You don't have to pick just one: you can split a year's contribution between both, as long as the total stays within the annual limit. And high earners shut out of direct Roth contributions sometimes use a "backdoor Roth" — a non-deductible traditional contribution converted to a Roth — though the conversion can trigger tax if you hold other pre-tax IRA money (the "pro-rata rule"), so it's worth professional advice.

A simple frame: lean Roth if you're early-career, in a low or moderate bracket, or value the no-RMD flexibility; lean traditional if you're in a high bracket now and expect a lower one later. Unsure? Splitting, or a quick check with a fee-only planner, is a reasonable hedge.