Traditional vs Roth IRA: The Rules Behind the Choice

An individual retirement arrangement (IRA) comes in two common forms: traditional and Roth. Both let savings grow with tax advantages. They differ mainly in when you pay tax. This guide sets out the rules side by side, using IRS figures. It explains rules only. It does not tell you which one to pick, because that depends on your income, your tax situation and your plans.

What is the basic difference?

The IRS says traditional IRA contributions "may be fully or partially deductible, depending on your filing status and income," and that amounts in the account "are not taxed until you take a" distribution (IRS: Traditional IRAs). For a Roth IRA, the IRS says "You cannot deduct contributions," and "If you satisfy the requirements, qualified distributions are tax-free" (IRS: Roth IRAs).

Sources: IRS pages on traditional IRAs, Roth IRAs and Topic 451; Publication 590-B.

What is the 2026 contribution limit?

For 2026 the IRS lists a limit of $7,500, or $8,600 if you are age 50 or older (IRS: IRA contribution limits). The Roth page adds that "The same combined contribution limit applies to all of your Roth and traditional IRAs." So the limit is shared. Putting $7,500 in a Roth does not let you put another $7,500 in a traditional IRA the same year.

The IRS Roth page also says you can contribute to a Roth IRA after age 70½. For the deadline, Publication 590-A says contributions for 2025 must generally be made by April 15, 2026 (Pub. 590-A). Our guide to year-end retirement account dates covers timing traps.

Who can deduct a traditional IRA contribution?

Anyone with enough earned income may be able to contribute. Whether the contribution is deductible can depend on whether you or your spouse is covered by a retirement plan at work. Publication 590-A says that if you or your spouse was covered by an employer retirement plan during the year, your deduction "may be further limited" (Pub. 590-A).

Publication 590-A lists these 2026 modified adjusted gross income (MAGI) ranges, in which the deduction is reduced and then phased out:

For married filing separately, the publication says the deduction is reduced when MAGI is under $10,000. If you are not covered by a plan at work and your spouse is not either, these ranges are not described here; check Publication 590-A for your case.

Who can contribute to a Roth IRA?

A Roth IRA has income limits on contributing. Publication 590-A lists these 2026 MAGI phase-out ranges:

When are Roth withdrawals tax-free?

The IRS calls a tax-free withdrawal a qualified distribution. The Form 8606 instructions say it must be made after the 5-year period beginning with the first year for which a contribution (including a conversion or a rollover from a qualified plan) was made to a Roth IRA, and it must also meet one of these conditions:

• on or after the date you reach age 59½;
• after your death;
• due to your disability; or
• for qualified first-time homebuyer expenses.

Source: Instructions for Form 8606. The instructions introduce the definition with "Generally," so other rules can apply. Publication 590-B has more detail on the 5-year rules and on the order in which Roth money comes out, and we did not read those parts, so ask a tax professional about a specific withdrawal.

Example: why the 5-year clock matters

Say a person first contributes to a Roth IRA in 2026. Under the Form 8606 wording, the 5-year period begins with that tax year. A withdrawal of earnings before the period ends would not meet the 5-year test, even if the person is over 59½. (This is our reading of the instructions, with made-up facts.)

What about required minimum distributions?

Required minimum distributions (RMDs) are yearly withdrawals the IRS makes you start at a certain age. Publication 590-B says traditional IRA owners must begin by April 1 of the year after the year they reach age 73 under the rule it describes, and that original Roth IRA owners "don't have to take distributions regardless of your age" (Pub. 590-B). The start age can differ for people born in later years, so check the IRS RMD pages for your birth year. Our guide to RMD deadline traps explains how timing mistakes happen. Roth beneficiaries may have to take distributions after the owner's death.

What happens if you withdraw early?

The IRS says taxable distributions from a traditional or Roth IRA made before age 59½ may be subject to an additional 10% tax unless an exception applies (Topic 451). Publication 590-B lists exceptions, including for disability, first-home purchases and certain medical costs. We did not read each exception's conditions, so do not assume one applies.

Related questions

Can I work and still contribute? Contributions generally need taxable compensation. See working in retirement.

What if I am self-employed? Other plans exist besides IRAs. See retirement planning for the self-employed.

Can I convert a traditional IRA to a Roth? Conversions are taxable events and are outside this guide. A qualified professional can help.

Common mistakes

• Assuming Roth withdrawals are always tax-free. They must be qualified.
• Ignoring the shared limit. One limit covers all your traditional and Roth IRAs.
• Using outdated income ranges. The IRS updates them each year.
• Forgetting the workplace-plan question. It can change whether a traditional contribution is deductible.
• Missing the 5-year clock. It can affect earnings.

Questions to ask a professional

• Is my traditional IRA contribution deductible given my MAGI and workplace plan?
• Am I within the Roth income range this year?
• Does my withdrawal plan meet the qualified-distribution conditions?
• How do these accounts fit with Social Security taxes and Medicare premiums?

Where gold and silver IRAs fit - and where they do not

Either IRA type can be set up as a self-directed account that holds approved precious metals. People who consider this point to diversification, a long record of gold as a store of value, and the appeal of a tangible asset. These are arguments, not guarantees, and this site makes no price forecast.

The rules and costs matter as much. The IRS says a collectible acquired by an individually directed account is treated as an immediate distribution equal to its cost. It lists exceptions for certain gold, silver and platinum coins and for bullion of a certain fineness, "if a bank or approved non-bank trustee keeps physical possession of it" (IRS collectibles page). The traditional-versus-Roth rules above apply to the account either way; metals do not change them. Our Roth gold IRA guide, gold IRA vs regular IRA comparison, contribution limits guide, fee guide and risk guide cover the details. This site does not say whether metals suit any one person.

What we did not check

We did not read the 5-year and ordering rules in Publication 590-B in full, the early-withdrawal exceptions, conversion rules, state taxes, or how Roth and traditional rules apply to inherited IRAs. Rules change each year, so confirm with the IRS and a qualified professional.