Roth vs. Traditional IRA

Feature	Roth IRA	Traditional IRA
Tax deduction today	❌ No deduction for contributions	✅ Potential deduction for contributions
Taxes on contributions	Pay income tax now	May get a tax deduction now
Taxes on investment growth	Tax-free	Tax-deferred
Taxes when withdrawing	Tax-free if qualified	Withdrawals generally taxed as ordinary income
Qualified withdrawal age	Generally 59½, plus 5-year rule	Generally 59½
Required Minimum Distributions (RMDs)	❌ None during your lifetime	✅ Generally required starting at applicable RMD age
Early withdrawals of contributions	Contributions can generally be withdrawn tax/penalty-free	Generally taxable and potentially subject to 10% penalty
Income limits to contribute	✅ Yes	❌ No income limit to contribute
Income limits for deduction	N/A	✅ Deduction can be limited if you or your spouse have a workplace retirement plan
Best tax environment	When you expect your future tax rate to be higher	When you expect your future tax rate to be lower
Estate planning	Very favorable because heirs can receive tax-free qualified distributions	Heirs generally owe income tax on distributions
Tax diversification	Gives you a pool of tax-free retirement money	Gives you tax-deferred retirement money