What is the difference between a Roth IRA and a Traditional IRA?

With a Roth IRA, you contribute after-tax dollars today, and all your future withdrawals in retirement are 100% tax-free. With a Traditional IRA, contributions are tax-deductible today, but withdrawals in retirement are taxed as ordinary income.

What is the 2025/2026 IRA contribution limit?

The annual contribution limit is $7,000 for individuals under age 50, and $8,000 for those aged 50 and older (including the $1,000 catch-up limit).

When is a Roth IRA better than a Traditional IRA?

A Roth IRA is generally better if you expect to be in a higher or equal tax bracket in retirement than you are today (common for young professionals and early career earners).

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Compare Roth vs Traditional IRA After-Tax Wealth

Roth IRA Net Take-Home (Tax Free)

$1,535,211.62

100% Tax-Free Withdrawals in Retirement

Total Cash Invested: $259,000.00

Traditional IRA (After Taxes): $1,304,929.88

Roth Extra Advantage: $230,281.74