Traditional vs. Roth IRA: How They Differ (2026)

Traditional vs. Roth IRA, side by side

The core question is timing: a traditional IRA can lower tax now and taxes withdrawals later, while a Roth IRA gives no break now but qualified withdrawals later are tax-free. Which one fits depends on facts only you have, such as your tax rate now compared with what you expect in retirement.

2026 contribution limits

• $7,500 total for all traditional and Roth IRAs, plus a $1,100 catch-up at age 50 or older ($8,600 total).
• You can't contribute more than your taxable compensation for the year. A spouse with little or no pay may be able to contribute based on the joint return (the spousal IRA rule in Publication 590-A).
• There's no age limit for contributing to either type, as long as you have compensation.
• You can split the limit between a traditional and a Roth IRA, but the total can't exceed it.

Roth IRA income limits for 2026

Between the two amounts, the allowed contribution is reduced using the worksheet in Publication 590-A. Above the range, a direct Roth contribution isn't allowed. Some people then look at a nondeductible traditional contribution followed by a conversion; see the backdoor Roth guide for how that is taxed.

Traditional IRA deduction limits for 2026

Anyone with compensation can contribute to a traditional IRA. The question is only whether the contribution is deductible. If neither you nor your spouse is covered by a workplace retirement plan, the full contribution is deductible. If one of you is covered, the deduction phases out:

Any part you can't deduct is a nondeductible contribution. It gives you "basis" that isn't taxed again when it comes out, but you have to report it on Form 8606. Skipping that form when it's required carries a $50 penalty unless you show reasonable cause.

Taking money out

Traditional IRA

Withdrawals are taxable except for any basis, and before age 59½ generally also face a 10% additional tax unless an exception applies (for example, up to $10,000 for a first home, certain education costs, disability or a series of substantially equal payments). Required minimum distributions start at your RMD age; see the RMD guide.

Roth IRA

A qualified distribution is tax-free. It must come after the 5-year period that starts with the first tax year you made any Roth IRA contribution, and be made at 59½ or later, because of disability, to a beneficiary after death, or for a first home (up to $10,000 lifetime).

If a withdrawal isn't qualified, the IRS ordering rules treat it as coming out in this order: your regular contributions first (never taxed or penalized), then conversions oldest first, then earnings. Roth IRAs have no required minimum distributions while the owner is alive.

Connecticut and North Carolina

• Connecticut: the CT Office of Legislative Research reports an income-based deduction for traditional IRA distributions, 100% starting in 2026 for taxpayers under the income limits. Qualified Roth distributions aren't in federal income to begin with.
• North Carolina: taxable IRA withdrawals are generally taxed at the flat individual rate, 3.99% for tax years after 2025, unless an exception such as the Bailey retirement deduction applies.

Questions to think through

• Is your tax rate this year higher or lower than you expect it to be when you withdraw?
• Is your income near a Roth or deduction phase-out range?
• Do you already have pre-tax IRA money? It matters if you ever convert (the pro-rata rule).
• Might you need the money before 59½? Roth contributions come out first and tax-free.
• Would a lower adjusted gross income this year help with something else, such as an education credit or financial aid?

Nothing here recommends one type of account over the other for you.