When someone decides to open an individual retirement account, or move savings from a former 401(k), the first decision is usually Roth or traditional. The difference seems small at contribution time, but it completely changes how much you pay in taxes today, how much you'll pay when you withdraw the money, and how that account is handled once you reach your 70s or 80s. This guide explains the key differences for 2026: tax treatment, contribution limits, income eligibility, required minimum distributions, and how this decision fits with a 401(k) rollover.
The fundamental difference: when you pay taxes
A traditional IRA generally lets you deduct your contribution from your taxable income in the year you make it (if you qualify, as explained below), and you then pay taxes on the money when you withdraw it in retirement, including both your original contributions and all accumulated growth.
A Roth IRA works in reverse: you contribute with money that has already been taxed, with no deduction at all, but qualified withdrawals in retirement — both your contributions and all the growth — are completely free of federal income tax. That difference means the central question isn't "which account is better?" but "at which point in my life would I rather pay taxes: now or later?"
Contribution limits for 2026
For 2026, the combined contribution limit across all your IRA accounts (Roth and traditional together) is $7,500, or $8,600 if you're 50 or older, thanks to an additional $1,100 catch-up contribution. This limit is total, not per account: if you contribute $4,000 to a Roth IRA, you only have $3,500 left available for a traditional IRA that same year.
Unlike a 401(k), which can accept much higher contributions, IRA accounts have relatively modest limits, which is why many families combine an active workplace 401(k) with an IRA to maximize how much they can save with tax advantages each year.
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Income eligibility: who can contribute to each
The Roth IRA has income limits that determine whether you can contribute directly. For 2026, if you're single or head of household, your ability to contribute starts phasing out at a modified adjusted gross income (MAGI) of $153,000 and disappears entirely at $168,000. If you're married filing jointly, that range runs from $242,000 to $252,000.
The traditional IRA has no income limit to contribute, but if you or your spouse participate in a workplace retirement plan, your ability to deduct that contribution does depend on your income. For 2026, if you're single and covered by a workplace plan, the deduction phases out between $79,000 and $89,000 of MAGI. If you're married filing jointly and covered by a workplace plan, that range is $126,000 to $146,000; if your spouse is covered but you aren't, the range rises to $236,000–$246,000.
If neither you nor your spouse participate in a workplace retirement plan, you can deduct your full traditional IRA contribution regardless of your income level.
Required minimum distributions (RMDs): the difference that surprises people most
A traditional IRA requires you to begin withdrawing a minimum amount each year starting at a certain age, regardless of whether you need that money or not. Those mandatory withdrawals are taxed as ordinary income and, in some cases, can push you into a higher tax bracket or increase how much of your Social Security benefit gets taxed.
A Roth IRA, by contrast, requires no minimum distributions during the original account holder's lifetime. This makes it a useful tool for people who want to let money keep growing as long as possible, or for those planning to leave a tax-free inheritance to their children or grandchildren.
When each one makes sense based on your age and tax situation
If you expect to be in a lower tax bracket in retirement than you are now — common for people at the peak of their highest-earning years — a traditional IRA can make more sense, because you deduct the contribution now, when your tax rate is higher, and pay taxes later at a lower rate.
If instead you expect to maintain a similar or even higher income in retirement, or you simply prefer the certainty of knowing exactly how much you'll be able to withdraw tax-free, a Roth IRA is often more attractive. It's also a popular choice among younger workers who are in a low tax bracket now and expect to earn more over time.
Many families don't pick just one account forever. Diversifying between a Roth and a traditional account gives you flexibility to decide, year by year during retirement, which account to withdraw from depending on how your taxable income looks at that point.
How this connects to a 401(k) rollover
If you left a job and have an old 401(k), you can typically move it into a traditional IRA without triggering immediate taxes, since both accounts share the same tax-deferred treatment. Moving it into a Roth IRA, on the other hand, is technically a conversion: the converted amount generally counts toward your taxable income for that year.
This decision deserves a careful review, especially if your old 401(k) has a sizable balance. Our 401(k) rollover checklist covers the steps of the process, and our guide on 401(k) vs. IRA rollover compares that transfer decision in detail. This guide, by contrast, focuses only on comparing Roth against traditional once you've already decided to open or fund an IRA.
Annuities and income planning alongside your IRA
Some families combine a traditional or Roth IRA with a fixed annuity to lock in a predictable income stream during retirement, especially when they want to supplement their IRA withdrawals with a guaranteed payment that isn't tied to the market.
You can read our fixed annuities guide and our retirement income planning guide to see how these tools fit alongside your IRA within a complete retirement plan.
A bilingual, local resource in Southern California
Karla Arámburo is a bilingual, California-licensed agent serving families in Irvine, San Diego and the rest of Southern California. Reviewing whether a Roth IRA, a traditional IRA, or a combination of both makes sense for your situation costs nothing and comes with no pressure to enroll. You can call or text (619) 321-8733 or explore our retirement planning services. This page is general education, not individualized tax advice; we also recommend speaking with an accountant or tax preparer about your specific situation.
Frequently asked questions
Can I have both a Roth IRA and a traditional IRA at the same time?
Yes. You can have both accounts open, but the $7,500 contribution limit for 2026 (or $8,600 if you're 50 or older) applies combined across both, not separately to each one.
What if my income is too high to contribute directly to a Roth IRA?
You may consider a strategy known as a "backdoor Roth": you contribute to a non-deductible traditional IRA and then convert it to a Roth. This strategy has specific rules around taxes and any other existing IRA accounts, so it's worth reviewing carefully before doing it.
Do required minimum distributions (RMDs) apply to a Roth IRA?
Not while the original owner is alive. Roth IRA accounts have no RMD for the original account holder, unlike a traditional IRA, which requires minimum withdrawals starting at a certain age.
At what age must I start taking RMDs from a traditional IRA?
Under current rules, the age you must begin required minimum distributions depends on your birth year. We confirm the exact age that applies to you under the law in effect before you approach that stage.
Can I convert my 401(k) directly into a Roth IRA?
Yes, through a Roth conversion. That converted amount generally counts as taxable income in the year of the conversion, so it's worth planning the timing and amount carefully to avoid jumping into a higher tax bracket.
Do Roth IRA withdrawals count toward how my Social Security is taxed?
Generally no, since qualified Roth IRA withdrawals are not considered taxable income, while traditional IRA withdrawals can increase your combined income and affect how much of your Social Security benefit gets taxed.
Can I contribute to an IRA if I already have a 401(k) at work?
Yes, you can contribute to an IRA in addition to your 401(k). However, if you have a workplace retirement plan, your ability to deduct a traditional IRA contribution may be reduced based on your income, while a Roth IRA never offers a deduction either way.