Finance
Roth vs. Traditional IRA
Updated 2026-01-18
Definition
A traditional IRA takes pre-tax contributions and taxes withdrawals in retirement. A Roth IRA takes after-tax contributions and makes qualified withdrawals tax-free. The 2026 contribution limit for both is $7,000 ($8,000 for age 50+). The Roth advantage grows with your retirement tax rate, if you expect to be in the same or a higher bracket later, the Roth wins mathematically. Traditional IRAs win when your current bracket is higher than the expected retirement bracket, which is common in peak earning years.
Primary source: IRS IRA comparison
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