Roth vs traditional IRA:
which is better?

The core
difference

The Roth vs traditional IRA decision comes down to one thing: when you pay taxes. With a traditional IRA, you get a tax deduction today and pay taxes when you withdraw in retirement. With a Roth IRA, you pay taxes now and withdraw everything — including decades of growth — completely tax-free.

Think of it as a choice between tax-now and tax-later. A traditional IRA is a deal with the government: "I'll defer my taxes today if you let me pay them when I'm retired." A Roth IRA is the opposite deal: "I'll pay my taxes now if you promise to never tax this money again." Both are legitimate strategies. Which one wins depends entirely on whether your tax rate is higher now or later.

This matters more than most people realize. The difference between choosing Roth or traditional over a 30-year career can amount to tens of thousands of dollars in lifetime taxes. And unlike investment returns, which you can't control, your account type is a decision you make every year.

Contribution rules
and limits

Both Roth and traditional IRAs share the same annual contribution limit: $7,000 in 2026 if you're under 50, or $8,000 if you're 50 or older (the extra $1,000 is the catch-up contribution). This is a combined limit — if you contribute $4,000 to a traditional IRA, you can only put $3,000 into a Roth IRA that same year.

But the two account types have very different eligibility rules. Roth IRAs have income limits that can prevent high earners from contributing directly. Traditional IRAs are available to anyone with earned income, but the tax deduction phases out if you (or your spouse) are covered by an employer retirement plan.

A key nuance: you can always contribute to a traditional IRA regardless of income — but the contribution may not be deductible. A non-deductible traditional IRA contribution gives you the worst of both worlds: no upfront tax break, and you'll owe taxes on the growth when you withdraw. In that situation, a Roth IRA (or backdoor Roth) is almost always the better choice.

The tax bracket
question

This is the analytical core of the Roth vs traditional decision. If you could predict your future tax rate with certainty, the answer would be simple math. Since you can't, you need a framework for thinking through the scenarios.

Scenario 1: High earner now, lower bracket in retirement. Suppose you earn $180,000 and your marginal rate is 24%. You contribute $7,000 to a traditional IRA and save $1,680 in taxes this year. In retirement, your income is $55,000 (Social Security plus modest withdrawals), putting you in the 12% bracket. You'd pay $840 in tax on that $7,000 withdrawal — half what you saved. Traditional wins by $840.

Scenario 2: Early career, lower bracket now. You earn $45,000 and your marginal rate is 12%. You contribute $7,000 to a Roth IRA, paying $840 in taxes on that income today. Over 30 years at 7% average growth, that $7,000 becomes roughly $53,000. If your retirement income (including Social Security, RMDs, and pensions) puts you in the 22% bracket, withdrawing $53,000 from a traditional account would cost $11,660 in taxes. From a Roth? Zero. Roth wins by a wide margin.

Scenario 3: Tax rates are uncertain. What if Congress raises rates? What if your retirement income is higher than expected? This uncertainty is the strongest argument for tax diversification — having money in both Roth and traditional accounts so you can draw from whichever is more efficient in any given year. It's the retirement equivalent of not putting all your eggs in one basket.

The breakeven case. If your tax rate is exactly the same now and in retirement, Roth and traditional produce identical after-tax results mathematically. But Roth still has advantages in this scenario: no RMDs, more flexibility, and no risk of future rate increases eroding your traditional balance. When the math is a coin flip, Roth's structural advantages tip the scale.

RMDs: the hidden
Roth advantage

Starting at age 73, the IRS requires you to withdraw a minimum amount from traditional IRAs and 401(k)s each year. These Required Minimum Distributions (RMDs) are calculated based on your account balance and life expectancy, and they're taxed as ordinary income — whether you need the money or not.

Roth IRAs have no RMDs for the original owner. This is one of the most underappreciated differences between the two account types. Your Roth balance can continue compounding tax-free for your entire lifetime, giving you complete control over when and how much you withdraw.

The RMD problem compounds over time. A $500,000 traditional IRA at age 73 requires roughly a $19,000 first-year distribution (using the Uniform Lifetime Table divisor of 26.5). But the remaining balance keeps growing, and RMD percentages increase each year. By age 80, the required distribution rate is approximately 5.0%. By 85, it's 6.25%. These forced withdrawals can push you into higher tax brackets, increase the taxable portion of your Social Security benefits, and trigger higher Medicare premiums (IRMAA surcharges).

This is also where Roth accounts provide an estate planning advantage. Inherited Roth IRAs are tax-free for beneficiaries (though they must be distributed within 10 years under current rules). Inherited traditional IRAs create a taxable income event for your heirs, often at their peak earning years when their marginal rate is highest.

For a deeper look at how withdrawal ordering interacts with RMDs and tax brackets, see our guide on which accounts to withdraw from first in retirement.

The Roth
conversion bridge

You don't have to choose between Roth and traditional permanently. If you have traditional IRA or 401(k) money, you can convert some or all of it to Roth at any time. You'll pay income tax on the converted amount in the year of conversion, but after that the money grows and is withdrawn tax-free.

The most powerful conversion window is the gap between retirement and age 73 — when your earned income drops but RMDs haven't started. During these years, your taxable income may be low enough that you can convert traditional IRA money while staying in the 10% or 12% bracket. A retiree with $50,000 in Social Security and no other income could convert roughly $40,000 to $50,000 per year while staying in the 12% bracket (after the standard deduction).

Done strategically over 5 to 10 years, this can dramatically reduce the traditional IRA balance subject to RMDs, lower your lifetime tax bill, and create a larger tax-free Roth pool for late retirement and legacy. The key is paying attention to the tax brackets and converting just enough each year to fill up the lower brackets without jumping into a higher one.

Which is better?
It depends

There is no single right answer. But there is a decision framework that works for most people. The goal isn't to pick a winner — it's to understand which account type is more efficient given your specific circumstances, and to recognize that the answer may change over your career.

For a broader view of how your total savings need connects to these account decisions, see how much do I need to retire?

Model the
difference

The Roth vs traditional question isn't abstract — it has a dollar answer specific to your situation. Your current balances, tax bracket, retirement age, Social Security timing, and state taxes all affect which account type produces more after-tax income over your lifetime.

Drawdown Arc's projection engine models all of this year by year. Enter your Roth and traditional balances separately, set your spending target, and see exactly how taxes, RMDs, and withdrawal sequencing affect your retirement income. You can adjust the mix between accounts and watch the tax impact change in real time.

If you're considering Roth conversions, the projection shows you how shifting money from traditional to Roth today changes your tax picture for every year of retirement. It's the fastest way to see whether converting makes sense — and how much to convert.