Key takeaways
- Both IRAs share a 2026 contribution limit of $7,500, or $8,600 if you're 50 or older.
- Roth: pay taxes now, take tax-free withdrawals in retirement. Traditional: possible deduction now, taxed later.
- You have until April 15, 2027, to make 2026 IRA contributions.
An Individual Retirement Account (IRA) lets you save for retirement with tax advantages, whether or not you have a 401(k) at work. The big decision is Roth or traditional.
The core difference
| Roth IRA | Traditional IRA | |
|---|---|---|
| Contributions | After-tax money | May be tax-deductible |
| Growth | Tax-free | Tax-deferred |
| Withdrawals in retirement | Tax-free if rules are met | Taxed as income |
| Required minimum distributions | None for the original owner | Yes, starting at age 73 |
| Income limits | Yes, to contribute | No limit to contribute; deduction limits apply if covered by a work plan |
2026 contribution limits
- $7,500 for those under 50
- $8,600 for those 50 and older ($1,100 catch-up)
The limit is combined across all your IRAs. You can contribute for 2026 until the tax filing deadline, April 15, 2027.
When a Roth often makes sense
- You’re early in your career and expect to earn more later.
- You think your tax rate will be higher in retirement.
- You want flexibility: you can withdraw your contributions (not earnings) anytime without tax or penalty.
- You want tax-free income in retirement to balance taxable accounts.
When a traditional IRA often makes sense
- You’re in a high tax bracket now and expect a lower one in retirement.
- You can deduct the contribution. If you or your spouse have a workplace plan, the deduction phases out at certain incomes.
- You want to lower your taxable income this year.
Roth income limits
Direct Roth contributions phase out at higher incomes. Check the IRS’s current limits for your filing status. Higher earners sometimes use a “backdoor Roth,” contributing to a traditional IRA and converting it, which has tax rules worth reviewing with a professional.
Can’t decide?
You can split contributions between both types in the same year, as long as the total stays under the limit. Having both gives you more flexibility to manage taxes in retirement.
What to invest in
An IRA is just the account. Inside it, you choose investments. Low-cost index funds or a target-date fund are simple choices for most people.
WalletJolly may earn a commission from links on this page. Rates, prices and rules mentioned are current as of Oct. 28, 2026 and can change. This article is general information, not financial, tax, insurance or legal advice.
