Traditional IRA vs Roth IRA
**Traditional IRA** contributions may be tax-deductible now; withdrawals in retirement are taxed. **Roth IRA** uses after-tax dollars but qualified withdrawals can be tax-free.
Step by step
1. Estimate future bracket
High earners now / lower in retirement often favor Traditional.
2. Check eligibility
Roth has MAGI limits; Traditional has deductibility limits if covered by a plan.
3. Plan RMDs
Traditional IRAs have required minimum distributions; Roth IRAs currently avoid RMDs for owners.
Traditional vs Roth IRA
Many savers hold both for tax diversification.
- Traditional: Deduction now; taxed later.
- Roth: Pay tax now; tax-free qualified growth.
Use our calculators
Common mistakes
- Exceeding income limits for Roth
- Missing the tax deadline for prior-year Traditional
FAQ
Can I contribute to both?
Yes, combined annual IRA limit applies across accounts.