Roth vs. Traditional IRA: Which Wins for You?

The fundamental difference

• Traditional IRA — you contribute pre-tax. Money grows tax-deferred. You pay ordinary income tax on withdrawals.
• Roth IRA — you contribute after-tax. Money grows tax-free. Withdrawals (in retirement) are tax-free.

If your tax rate is the same now and in retirement, the two are mathematically identical. The whole game is predicting which is higher.

When Roth wins

• You're early in your career (low tax bracket now, likely higher later).
• You expect to keep working at a high income into retirement (Bezos, basically).
• You want optionality — Roth contributions can be withdrawn penalty-free anytime.
• You want to leave money to heirs — Roth has no required minimum distributions during your lifetime.
• You think tax rates will rise (current rates are historically low).

When Traditional wins

• You're in peak earning years (high bracket now, likely lower in retirement).
• You'll retire in a low-tax state and avoid state income tax on withdrawals.
• You'll have lower income in retirement and drop to a lower bracket.
• You want the tax deduction NOW to fund your IRA contribution effectively.

The "do both" answer

For most people in the 22-24% bracket, the math is roughly a wash. The strategic answer is often:

• Get the 401(k) employer match (free money, always).
• Max a Roth IRA ($7,000 for 2025, $8,000 if 50+).
• Then max Traditional 401(k) up to the $23,500 limit.
• If you have more to save, taxable brokerage (or HSA — see our HSA guide).

This gives you tax diversification in retirement — you can pull from Roth or Traditional depending on what minimizes that year's tax bill.

Conversion strategy (Roth conversions)

The Roth IRA Conversion calculator helps with the decision of whether to convert Traditional → Roth. Common scenarios where conversions win:

• Gap years — between retirement and Social Security/RMDs, when your income temporarily drops.
• Market crashes — convert when account values are low so the future growth is tax-free.
• High future RMDs — large Traditional IRAs force big RMDs at age 73; converting earlier smooths the tax bill.

Income limits

For 2025:

• Traditional IRA deduction phaseout (if you have a workplace plan): single $77,000-$87,000, married $123,000-$143,000.
• Roth IRA contribution phaseout: single $150,000-$165,000, married $236,000-$246,000.

If you're over Roth limits, look into a backdoor Roth conversion (separate strategy).