Traditional vs. Roth IRA
- Traditional IRA – contributions may be tax-deductible now; the money grows tax-deferred, and withdrawals in retirement are taxed as income.
- Roth IRA – you contribute after-tax money; growth and qualified withdrawals after age 59½ are tax-free.
The calculator gives both accounts the same cost to your paycheck. A $7,500 traditional contribution costs only $7,500 minus the tax you save, so the Roth gets that smaller amount. Then it grows both at your expected return and applies your retirement tax rate to the traditional IRA. The result comes down to one question: will your tax rate be higher now or in retirement?
2026 IRA rules
- Contribution limit – $7,500 a year, or $8,600 at age 50 and older, shared across all your IRAs.
- Roth income limits – contributions phase out between $153,000 and $168,000 of modified AGI for single filers, and between $242,000 and $252,000 for married couples filing jointly.
- Deadline – you can contribute for 2026 until April 15, 2027.
Frequently asked questions
Can I have both a traditional and a Roth IRA?
Yes, but the yearly limit is shared. For example, you could put $4,000 in one and $3,500 in the other in 2026.
Is my traditional IRA contribution deductible?
It is fully deductible if neither you nor your spouse has a workplace retirement plan. If you do, the deduction phases out at higher incomes, from $81,000 to $91,000 for single filers in 2026.
Do I have to take money out of an IRA?
Traditional IRAs require minimum distributions starting at age 73 (75 if born in 1960 or later). Roth IRAs have no required withdrawals during the owner's lifetime.