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Roth vs Traditional IRA: Complete Decision Guide

Deciding between a Roth and Traditional IRA is one of the most important retirement planning choices you'll make. This guide breaks down contribution limits, income phase-outs, and tax implications to help you optimize your savings.

$7,000
2024/2025 Contribution Limit
$1,000
Age 50+ Catch-up
Tax-Free
Roth Growth & Withdrawals
Tax-Deferred
Traditional Growth

Historical Contribution Limits & Income Phase-outs

Year ↕ Base Limit ↕ Catch-up Limit ↕ Roth Phase-out (Single) ↕ Roth Phase-out (MFJ) ↕

Break-Even Tax Rate Calculator

Compare the projected ending balance of a Roth vs Traditional IRA. The traditional calculation assumes tax savings are invested in a taxable brokerage account.

Methodology & Data Sources

Contribution Limits & Phase-outs: Data is sourced directly from the Internal Revenue Service (IRS). Historical limits are factual, while projected limits (e.g., 2026) are listed as 'N/A' or 'Null' until officially announced by the IRS.

Break-Even Calculator: The calculator assumes annual contributions made at the beginning of the year. For the Traditional IRA, we assume the upfront tax savings (Contribution * Current Tax Rate) are invested in a taxable brokerage account growing at the same rate, but subject to an assumed 15% long-term capital gains tax upon withdrawal. The final Traditional IRA balance is reduced by the Retirement Tax Rate to simulate after-tax value.

Frequently Asked Questions

Should I choose a Roth or Traditional IRA in 2026?
The choice between a Roth and Traditional IRA depends primarily on your current tax bracket versus your expected tax bracket in retirement. If you expect your tax rate to be higher in retirement, a Roth IRA is generally better. If you expect it to be lower, a Traditional IRA may offer better upfront tax savings.
What are the IRA contribution limits for 2024, 2025, and 2026?
For 2024 and 2025, the contribution limit for both Roth and Traditional IRAs is $7,000, with an additional $1,000 catch-up contribution for those age 50 or older. Limits for 2026 have not yet been officially announced by the IRS.
What are the income phase-outs for a Roth IRA?
For 2024, the income phase-out range for single filers is $146,000 to $161,000, and for married filing jointly, it is $230,000 to $240,000. For 2025, the ranges increased to $150,000-$165,000 for singles and $236,000-$246,000 for married couples.
Can I convert a Traditional IRA to a Roth IRA?
Yes, you can convert funds from a Traditional IRA to a Roth IRA at any time. This is often called a Roth conversion. However, you will have to pay ordinary income tax on the pre-tax amount you convert in the year of the conversion.
What are the RMD rules for Roth vs Traditional IRAs?
Traditional IRAs are subject to Required Minimum Distributions (RMDs) starting at age 73 (or 75 for those born in 1960 or later). Roth IRAs do not have RMDs during the original owner's lifetime.

Cite This Page

Westmount Fundamentals. "Roth vs Traditional IRA: Complete Decision Guide." westmountfundamentals.com/guide-roth-vs-traditional-ira, 2026.

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