Discover the Difference: Roth vs. Traditional IRAs

C. Brian McKee, RFC®, CKA®

March 06, 2026

McKee Financial Resources, Wealth Management Services

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Discover the Difference: Roth vs. Traditional IRAs

Understanding the timing of taxes can change your entire retirement picture.

You're staring at the enrollment form. Or maybe it's a website with dropdown menus and more acronyms than a government agency. Roth IRA. Traditional IRA. Contribution limits. Phase-outs. Your cursor hovers. Your coffee's getting cold.

And somewhere in the back of your mind, a voice says: Just pick one. How different can they really be?

More different than you'd think. But also simpler to understand than the jargon makes it seem.

The Core Difference: When You Pay Taxes

Both Roth and Traditional IRAs are tax-advantaged retirement accounts. The money inside can grow without being taxed every year. That part's the same. What's different is the timing of when Uncle Sam gets his cut.

Traditional IRA: You may get a tax deduction when you contribute. The money grows tax-deferred. When you withdraw in retirement, you pay income tax on those withdrawals.

Roth IRA: No tax deduction upfront. You contribute with money you've already paid taxes on. Qualified withdrawals in retirement come out tax-free. The growth, the gains, all of it.

One is pay-later. The other is pay-now. Neither is universally better. It depends on where you are, where you're headed, and how you think tax rates might shift between now and retirement.

Contribution Limits for 2026

According to the IRS, as of 2026, you can contribute up to $7,500 to an IRA. If you're age 50 or older, you can add another $1,100 as a catch-up contribution, bringing your total to $8,600.

That limit applies to your combined contributions across both Traditional and Roth IRAs. You can't put $7,500 into each. It's a shared cap.

And there's a ceiling most people don't think about: you can only contribute up to the amount of your taxable compensation for the year. If you earned $5,000, that's your limit.

Income Limits: Who Can Contribute to What

Here's where things get more specific.

Traditional IRAs: Anyone with earned income can contribute. There are no income limits on contributions themselves. However, if you (or your spouse) are covered by a workplace retirement plan, your ability to deduct those contributions starts to phase out at certain income levels. For 2026, single filers covered by a plan at work see the deduction phase out between $81,000 and $91,000 in modified adjusted gross income. For married couples filing jointly, the range is $129,000 to $149,000.

Roth IRAs: Income limits determine whether you can contribute at all. For 2026, single filers begin to phase out at $153,000 and lose eligibility entirely at $168,000. Married couples filing jointly phase out between $242,000 and $252,000.

You might be thinking: So if I make too much, I can't use a Roth?

Directly, no. But strategies like backdoor Roth conversions exist for higher earners. That's a conversation worth having with a financial professional, because it involves more moving parts.

Withdrawals: The Rules Are Not the Same

Traditional IRA withdrawals are taxed as ordinary income. And the IRS wants that money eventually, which is why required minimum distributions (RMDs) kick in at age 73. You can't let it sit forever.

Roth IRAs don't have RMDs during your lifetime. You contributed after-tax dollars, so the IRS isn't waiting on a payday. Qualified withdrawals — meaning you're at least 59½ and the account has been open for at least five years — come out completely tax-free.

Roth accounts can stay untouched and continue growing if you don't need them. That flexibility may matter for estate planning or for those years when you want to manage your taxable income more deliberately.

When One Might Make More Sense Than the Other

Neither account is a universal answer. But there are patterns worth considering.

A Roth IRA may be more appealing if you expect your tax rate to be higher in retirement than it is now. Early-career earners often fall into this category. You're paying taxes at a relatively low rate today, locking in that rate, and letting the account grow tax-free for decades.

A Traditional IRA may be more appealing if you're in your peak earning years and want to reduce taxable income now. You take the deduction today, defer the taxes, and plan to withdraw in retirement when your income — and possibly your tax bracket — might be lower.

But the tax code isn't static. Rates change. Life circumstances change. What seems like the obvious answer now might look different in ten years. That uncertainty is part of why some people contribute to both types of accounts over their careers, depending on the year.

Common Misconceptions

"I have a 401(k), so I can't have an IRA."

You can. The two aren't mutually exclusive. Having a workplace plan may affect your Traditional IRA deduction, but it doesn't prevent you from contributing.

"Roth means I'll never owe taxes."

Only if withdrawals are qualified. Pull money out early or before the five-year clock runs out, and you may owe taxes and penalties on the earnings.

"I should just pick whichever one gives me a tax break now."

Maybe. Or maybe not. Tax planning isn't just about this year's return. It's about decades of returns, in both senses of the word.

One Thing to Think About

If you're not sure which account fits better, you're not alone. The question isn't really Roth or Traditional. It's about understanding what each one does and building a strategy around your own situation.

That might mean starting with one, switching later, or using both at different stages.

Discover the Difference: Roth vs. Traditional IRAs

The Core Difference: When You Pay Taxes

Contribution Limits for 2026

Income Limits: Who Can Contribute to What

Withdrawals: The Rules Are Not the Same

When One Might Make More Sense Than the Other

Common Misconceptions

One Thing to Think About

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