Roth IRA vs Traditional IRA: Which Is Better for You?

The Core Difference

Traditional IRA: Contribute pre-tax, investments grow tax-deferred, pay taxes on withdrawal in retirement.
Roth IRA: Contribute after-tax, investments grow tax-free, pay no taxes on qualified withdrawals.

When Roth Usually Wins

• •
• •You are in a low tax bracket now and expect to be in a higher one in retirement
• •You are young (more decades of tax-free growth)
• •You want flexibility (Roth contributions — not earnings — can be withdrawn penalty-free anytime)
• •You are concerned about tax rates rising in the future

  When Traditional Usually Wins

• •
• •You are in a high tax bracket now and expect to be in a lower one in retirement
• •You need the tax deduction now to afford the contribution
• •Your income exceeds Roth eligibility limits (use the backdoor Roth instead)

  2024 Contribution Limits

  Both accounts share a combined limit: $7,000 ($8,000 if age 50 or older).

  Roth income limits: phase-out begins at $146,000 (single), $230,000 (married filing jointly).

  The Real Answer for Most People

  If you are unsure, choose Roth. Tax diversification in retirement is valuable, and the Roth grows tax-free.

  Conclusion

  The difference between Roth and Traditional is less important than simply contributing. Choose one and start now.