The core question is about taxes — now vs. later
A Traditional IRA gives you a tax deduction today. A Roth IRA gives you tax-free withdrawals in retirement. The question is simple: when do you want to pay taxes? When you're young and earning less — or when you're retired and (hopefully) living off decades of compounded growth?
For most people in their 20s and early 30s, the answer is obvious: pay taxes now, at your lower rate, and let decades of tax-free growth do the heavy lifting.
The Roth rule of thumb: If your current tax bracket is lower than you expect it to be in retirement, choose Roth. If you're in your highest earning years right now, Traditional may make more sense.
The numbers side by side
When Traditional wins
If you're currently in a high tax bracket — say, earning over $120,000 and in the 24% or 32% bracket — a Traditional IRA's upfront deduction becomes more valuable. You're getting a bigger tax break today, and you can invest the difference. It's also the right call if you expect to be in a lower bracket in retirement than you are now.
The Backdoor Roth: for high earners
Roth IRA contributions phase out above $146,000 (single, 2025). But high earners can still access Roth benefits through a "Backdoor Roth" — contributing to a non-deductible Traditional IRA and converting it to Roth. It's completely legal and widely used. Consult a financial advisor for the specifics.
- Under $75k income: Roth IRA is almost certainly the better choice
- $75k–$120k income: Roth still favored for most; run the numbers
- Over $146k income: Backdoor Roth or Traditional depending on situation
- Both have the same contribution limit: $7,000/year in 2025
See how your IRA could grow. Run the numbers with our compound interest calculator.
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