The choice comes down to one question: pay taxes now or later? Here's how to decide.
Both accounts let your investments grow tax-deferred, but they tax you at different times. A traditional IRA uses pre-tax money — you may deduct contributions now, then pay income tax on withdrawals in retirement. A Roth IRA uses after-tax money — no deduction now, but qualified withdrawals are completely tax-free.
A Roth is usually better if you expect to be in the same or higher tax bracket in retirement — which is common for younger savers early in their careers. You lock in today's lower rate and never pay tax on the growth. Roth IRAs also have no required minimum distributions during your lifetime.
A traditional IRA tends to win if you're in a high bracket now and expect a lower one in retirement, since the upfront deduction is worth more today than the tax you'll pay later. It's also useful for reducing this year's taxable income.
The IRS sets an annual contribution limit that applies across both accounts combined (with a higher limit if you're 50 or older). Roth IRAs have income phase-outs that can reduce or eliminate how much high earners may contribute directly, and traditional IRA deductibility can phase out if you're covered by a workplace plan. Check the current year's IRS figures before contributing.
Yes — many people split contributions between a Roth and a traditional IRA to hedge against future tax uncertainty. Just remember the annual limit applies to your combined contributions, not each account separately.