A Roth IRA and a traditional IRA hold the same investments. You can buy the same index fund in either one. What changes is when the IRS takes its share. With a traditional IRA you may get a deduction now and pay income tax when you withdraw. With a Roth you pay tax on the money first, and qualified withdrawals later are tax-free.
So the choice is mostly a bet on one question: is your tax rate higher today, or will it be higher when you take the money out?
The 2026 contribution limits
For 2026 the IRS set the combined IRA limit at $7,500, up from $7,000 in 2025. If you are 50 or older, you can add a $1,100 catch-up, for a total of $8,600. That limit covers all your IRAs together. If you put $5,000 in a Roth, you can put no more than $2,500 in a traditional IRA that year.
You also need earned income at least equal to what you contribute. A married person with no earnings can still contribute through a spousal IRA if the couple files jointly and the working spouse earns enough to cover both.
You have until the tax filing deadline of the following year to make a contribution for a given year. So 2026 contributions can go in as late as April 2027.
Income limits work differently for each
This is the part people mix up. Anyone with earned income can contribute to a traditional IRA. The income limits only decide whether you can deduct it, and they only kick in if you (or your spouse) are covered by a retirement plan at work.
The Roth has a limit on contributing at all. Above a certain income your allowed Roth contribution shrinks, and then it goes to zero.
| 2026 phase-out range (modified AGI) | Single / head of household | Married filing jointly |
|---|---|---|
| Roth IRA contribution | $153,000 to $168,000 | $242,000 to $252,000 |
| Traditional IRA deduction, you are covered by a workplace plan | $81,000 to $91,000 | $129,000 to $149,000 |
| Traditional IRA deduction, only your spouse is covered | n/a | $242,000 to $252,000 |
If you are married filing separately, both the Roth and deduction phase-outs run from $0 to $10,000, which shuts most people out. Source for all of the above: the IRS announcement of 2026 limits.
When the Roth tends to win
- You are early in your career. A 26-year-old earning $55,000 is probably in the 12% bracket. Paying 12% now on money that may grow for 40 years is usually a good trade.
- You expect higher income later. Medical residents, grad students, and people in their first job after a career change often fit here.
- You want flexibility. You can take out your Roth contributions (not the earnings) at any time without tax or penalty. That makes a Roth a reasonable second line behind an emergency fund.
- You don’t want required withdrawals. The original owner of a Roth IRA never has to take required minimum distributions. Traditional IRAs require them starting at age 73 under current law.
To withdraw earnings tax-free, the Roth generally has to have been open five years and you have to be 59½ or older, with a few exceptions such as disability.
When the traditional IRA tends to win
If you are in a high bracket now and expect a lower one in retirement, the deduction is worth more today than the tax-free withdrawals later. Someone in the 32% bracket who deducts a $7,500 contribution saves $2,400 in federal tax this year. If that person retires and lives on income that keeps them in the 12% or 22% bracket, they came out ahead.
The deduction also lowers your adjusted gross income, which can help with things that depend on income, such as some credits and student loan payments tied to income.
But the deduction only exists if you qualify. If you have a 401(k) at work and earn above the ranges in the table, a traditional IRA contribution goes in after tax with no deduction. That is the worst of both: you paid tax already, and the growth is still taxed on the way out. In that case a Roth is better if you are under the Roth limit, and if you are over both, look up the “backdoor Roth” and talk to a tax preparer about the pro-rata rule before trying it.
A quick way to decide
Look at your marginal federal bracket this year. If it is 10% or 12%, lean Roth. If it is 32% or higher, lean traditional, assuming you can deduct it. In the 22% and 24% brackets, it is close, and splitting the money between both is a sensible way to hedge, since nobody knows what tax rates will be in 30 years.
Also look at your workplace plan. Many 401(k) plans now offer a Roth option. If most of your savings already sit in pre-tax accounts, putting your IRA money in a Roth gives you a mix of taxable and tax-free money to draw from later. That mix lets you control your taxable income in retirement year by year, which is often more useful than getting the bracket guess exactly right.
One last practical point: opening the account is not the same as investing it. Money sent to an IRA often lands in a cash settlement fund and sits there until you choose an investment. Check that your contribution actually bought something.
This post is general information, not financial advice.