Roth vs Traditional IRA: Which Is Right for You?

A Traditional IRA gives you a tax break today. Your contributions may be tax-deductible, reducing your taxable income for the year. The money grows tax-deferred, but you'll pay income taxes when you withdraw it in retirement.

Traditional IRA Pros

• Immediate tax savings – Deductible contributions lower your tax bill this year
• No income limits for contributions – Anyone with earned income can contribute
• Potential double benefit – Tax deduction now + tax-free growth until withdrawal
• Lower tax bracket in retirement – Most people earn less in retirement, so withdrawals may be taxed at a lower rate

Traditional IRA Cons

• Taxable withdrawals – You'll owe income tax on everything you withdraw
• Required Minimum Distributions (RMDs) – Must start withdrawing at 73 (75 if born in 1960 or later), even if you don't need the money
• Early withdrawal penalties – 10% penalty + taxes if you withdraw before 59½
• Tax rate uncertainty – Future tax rates could be higher than today

A Roth IRA gives you a tax break in retirement. You contribute money you've already paid taxes on, but your investments grow tax-free, and qualified withdrawals are completely tax-free.

Roth IRA Pros

• Tax-free withdrawals in retirement – Pay taxes once, never again on that money
• No RMDs – No required distributions, so you control when (and if) you withdraw
• Access to contributions anytime – Withdraw your contributions (not earnings) tax and penalty-free at any time
• Tax diversification – Having both Roth and Traditional gives you flexibility in retirement
• Great for heirs – Beneficiaries receive tax-free income

Roth IRA Cons

• No immediate tax benefit – You don't get a tax deduction for contributions
• Income limits – High earners can't contribute directly (but backdoor Roth exists)
• 5-year rule for earnings – Earnings must stay in the account for 5 years to be tax-free
• Opportunity cost – Money paid in taxes today can't be invested

The decision comes down to one key question: Will your tax rate be higher or lower in retirement?

Yes! You can contribute to both a Roth IRA and Traditional IRA in the same year. However, your total combined contributions cannot exceed the annual limit ($7,500 in 2026, or $8,600 if 50+).

This "tax diversification" strategy gives you flexibility in retirement. You can withdraw from Traditional (taxable) or Roth (tax-free) accounts depending on your tax situation each year.

If your income is too high for direct Roth IRA contributions, you can use the backdoor Roth IRA strategy—a legal workaround that lets high earners access Roth benefits.

Often yes, if you have a large traditional IRA and a few low-income years between your last paycheck and your first required minimum distribution. For most people who have already retired, the Roth-versus-traditional question is no longer about where to put new contributions. It is about how much of an existing traditional balance to move into a Roth, and when, so that less of it is taxed later at higher rates.

The window is the stretch after earned income stops and before RMDs begin at 73, or 75 if you were born in 1960 or later. In those years taxable income can be unusually low, especially if you live on savings in a taxable account and delay Social Security. Once RMDs start, you lose control of the floor: the IRS sets a minimum withdrawal each year, it rises as a percentage of the balance with age, and it stacks on top of Social Security and any pension. A couple with $2 million in traditional IRAs at 75 can face RMDs large enough to push them into the 24% bracket and into Medicare's income-related surcharges for the rest of their lives. A surviving spouse who files single faces the same withdrawals with brackets half as wide. Our RMD calculator projects those withdrawals from your balance and birth year.

How does bracket filling work?

You convert just enough each year to use up a low bracket you would otherwise leave empty, and stop at the top of it. The 2026 brackets for married couples filing jointly end at $100,800 of taxable income for 12% and $211,400 for 22% (IRS, 2026). Taxable income is after deductions, so a couple both 65 or older can have more gross income than that before reaching the bracket top: the $32,200 standard deduction, $1,650 more for each spouse 65 or older, and, through 2028, the $6,000 senior deduction per person.

Consider a hypothetical couple, Richard, 67, and Susan, 66. Both are retired and on Medicare. They have $1.8 million in traditional IRAs, $600,000 in a taxable brokerage account, and a paid-off house. Richard's pension pays $36,000 a year, and interest and dividends add $14,000, so their adjusted gross income is $50,000 before any conversion. They are delaying Social Security to 70 and living on the brokerage account in the meantime. Richard was born in 1959, so his RMDs begin at 73; Susan was born in 1960, so hers begin at 75.

Filling the 12% bracket moves $98,300 for $11,350 of federal tax. Going further, to just under the first Medicare surcharge tier, moves $168,000 for $28,479. The extra $69,700 is taxed at about 24.6%, not the 22% the bracket suggests, because the senior deduction shrinks by 6 cents for every dollar of income above $150,000 for a joint return. Whether either step is worth it depends on the rate you expect to pay on the same dollars later. If RMDs, two Social Security checks and the pension would put Richard and Susan in the 24% bracket in their late 70s, or would leave the survivor in the 24% or 32% single bracket, paying 12% to 25% now is a good trade. If their later income would sit in the 12% bracket anyway, converting at 22% or more buys little. Our Roth conversion calculator runs this comparison year by year with your own figures.

How do Medicare surcharges (IRMAA) change the math?

A conversion counts as income for Medicare's income-related monthly adjustment amount, with a two-year lag. For 2026, the standard Part B premium is $202.90 a month, and surcharges begin when modified adjusted gross income from two years earlier exceeds $109,000 for a single filer or $218,000 for a joint return. The first tier adds $81.20 a month per person, and the tiers rise to $689.90 a month in total at $500,000 single or $750,000 joint (CMS, 2026). Part D has its own surcharge on the same brackets.

The tiers are cliffs, not gradual phase-ins. One dollar over $218,000 costs a married couple both on Medicare $81.20 × 2 × 12 = $1,948.80 more in Part B premiums for the year, plus the Part D surcharge. So a conversion in 2026 sets premiums for 2028. Leave a margin of a few thousand dollars below a threshold, because a year-end mutual fund distribution you did not expect can push you over. The thresholds are adjusted for inflation each year, so the 2028 tiers will be somewhat higher than the 2026 figures above. Sometimes crossing a tier on purpose is still right: paying one year of a surcharge to convert $100,000 more at 22% can beat decades of larger RMDs taxed at 24% with a surcharge every year. Our guide to Medicare enrollment and IRMAA covers the tiers, the appeal form for a life-changing event such as retirement, and Part D.

What if you are under 65 and buy insurance on the ACA marketplace?

Then the constraint is usually the premium tax credit, not IRMAA. For 2026, the enhanced subsidies of 2021 to 2025 have expired and the credit is again limited to household income of no more than 400% of the federal poverty line (IRS). Marketplace coverage for 2026 uses the 2025 poverty guidelines of $15,650 for one person and $21,150 for two (HealthCare.gov), so the limit is $62,600 for a single person and $84,600 for a couple. Above that, the credit is zero. For a couple in their early 60s, it can be worth thousands of dollars a year, so a conversion that crosses the line can cost far more than the tax on it.

The usual approach is to convert little or nothing while on a subsidized marketplace plan and convert more heavily from 65, once Medicare replaces it. Plan for the look-back: conversions at 63 and 64 set IRMAA for your first two years on Medicare.

Which five-year rules apply to a conversion?

There are two, and they measure different things (IRS Publication 590-B):

• The qualified-distribution clock. Earnings come out tax-free only after five tax years have passed since January 1 of the first year you funded any Roth IRA, by contribution or conversion, and you are 59½ or older. The clock runs once per person, across all your Roth IRAs. If you have never had a Roth IRA, a small conversion this year starts it.
• The per-conversion clock. Each conversion has its own five-year period, starting January 1 of the year you convert. Taking out the taxable amount you converted within that period can trigger the 10% early-distribution tax. The penalty does not apply once you are 59½, so for most readers in the gap years this clock is not a practical concern.

Distributions come out in a set order: regular contributions first, then conversions (oldest first, taxable portion before any nontaxable portion), then earnings. And a conversion is permanent. Conversions made in 2018 or later cannot be recharacterized back to a traditional IRA, so if the market drops the month after you convert, you still owe tax on the value you converted. Many people convert in stages during the year, or in December once their income for the year is known.

Should you pay the tax from the IRA or from other savings?

From other savings, if you can. If Richard and Susan convert $168,000 and pay the $28,479 tax from their brokerage account, the whole $168,000 grows tax-free in the Roth. If they have tax withheld from the conversion instead, only about $139,521 reaches the Roth. Paying from taxable money works like an extra Roth contribution, with no contribution limit. It also shrinks the taxable account, whose dividends and capital gains would otherwise be taxed every year. Anyone under 59½ should avoid withholding from the conversion, because the amount withheld counts as a distribution and can owe the 10% penalty.

You also have to pay the tax on time. A large conversion without withholding usually needs estimated tax payments that quarter, or an increase in withholding from a pension or other IRA distribution later in the year. The IRS treats withholding as paid evenly through the year no matter when it happens, so a December withholding can cover the whole year.

The heirs' side often settles the question for wealthier households. Most non-spouse beneficiaries must empty an inherited IRA within ten years, and adult children in their peak earning years may pay 32% or more on those withdrawals. Inherited Roth money comes out tax-free under the same ten-year rule. Our inherited IRA guide explains the rule, and Roth conversions before RMDs works through a full multi-year conversion plan, including how conversions fit with the order of retirement withdrawals and the timing of Social Security.