Project your Traditional IRA balance at retirement, the tax you save each year now, and what your account is worth after taxes later.
A Traditional IRA is a tax-deferred retirement account. Contributions may be tax-deductible in the year you make them, your investments grow without annual taxes, and you pay ordinary income tax only when you withdraw in retirement. That upfront deduction is the key difference from a Roth IRA, where you pay tax now and withdraw tax-free later.
Because qualifying contributions reduce your taxable income today, a $7,000 contribution in the 22% bracket saves about $1,540 on this year's tax bill. That immediate savings is the main appeal of a Traditional IRA, especially if you expect to be in a lower tax bracket in retirement than you are now.
For 2026 the IRA contribution limit is $7,000, with an extra $1,000 catch-up allowed if you're 50 or older. Traditional IRAs also require you to begin taking required minimum distributions (RMDs) starting at age 73, since the IRS eventually wants its deferred taxes. Verify current limits, as the IRS adjusts them periodically.
Tip: A Traditional IRA generally wins if your tax rate will be lower in retirement; a Roth wins if you expect a higher rate later. Many savers split contributions between both to hedge.
The balance at retirement is pre-tax — you'll owe income tax as you withdraw. The after-tax value estimates what's actually yours to spend by applying your expected retirement tax rate, giving a more honest comparison against a Roth account.