Traditional or Roth — which should I be using?

Both are individual retirement accounts with tax-advantaged growth. The difference is when the tax is paid.

Traditional IRA — tax later

Contributions may be tax-deductible (subject to income limits when covered by a workplace plan). The account grows tax-deferred. Withdrawals are taxed as ordinary income. Withdrawals before age 59½ generally incur a 10% penalty on top of income tax, with statutory exceptions. Required minimum distributions (RMDs) force annual withdrawals starting at age 73 (born 1951–1959) or 75 (born 1960 or later).

Roth IRA — tax now

Contributions are made with after-tax money (never deductible) and are subject to income limits. The account grows tax-free. Qualified withdrawals — owner is 59½+ and the account satisfies the 5-year rule — are entirely tax-free. Contributions (not earnings) can be withdrawn at any time, at any age, tax- and penalty-free. Roth IRAs have no RMDs during the owner's lifetime.

Side-by-side (2026)

The equivalence point

At the same tax rate on the way in and the way out, traditional and Roth produce identical after-tax results (tax-rate commutativity). The choice between them is primarily a bet on whether the contributor's marginal rate is higher now (favors traditional) or in retirement (favors Roth), plus secondary factors: RMD avoidance, estate treatment, and the effective extra contribution room a Roth provides because its dollar limit is measured in after-tax dollars.