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Decision Engine

Roth vs Traditional IRA: Which Is Right For You?

About 36 million US households own IRAs per Investment Company Institute data, yet the Roth versus Traditional choice remains the most-searched account-opening question on Google. Answer six questions about your current and future tax bracket, age, income, goals, and access needs to see which option fits your situation today; tax rules change, so confirm with a professional.

Last updated: May 2026

A Roth versus Traditional IRA lean is a tax-arbitrage decision: pay taxes now (Roth) or later (Traditional), based on your current marginal tax bracket compared to your expected bracket in retirement. Lean Toward Roth = Lower Current Bracket + Higher or Equal Expected Future Bracket + Long Horizon. 2024 Roth phaseout (single) typically target Well under $146,000.

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What is Roth vs Traditional Lean?

A Roth versus Traditional IRA lean is a tax-arbitrage decision: pay taxes now (Roth) or later (Traditional), based on your current marginal tax bracket compared to your expected bracket in retirement. Age, income, access needs, and estate-planning preferences also tilt the decision.

The Formula

Lean Toward Roth = Lower Current Bracket + Higher or Equal Expected Future Bracket + Long Horizon

When the current and future brackets are similar, secondary factors (no required minimum distributions on Roth, access to contributions without penalty, income-limit phaseouts) usually decide.

Worked Example

A 28-year-old in the 12% federal bracket, expecting a higher bracket in retirement based on career trajectory, comfortable with current cash flow.

Current bracket: 12%, low
Future bracket: expected to rise
Age: 28, long horizon for tax-free growth
Income: well under phaseout
Priority: tax-free income in retirement

📌 Strong lean toward a Roth IRA. The combination of a low current bracket and a long horizon makes the tax-free growth especially valuable. A split contribution is unnecessary at this profile.

Why This Matters

Tax-free growth compounds powerfully

A dollar in Roth at age 28 grows tax-free for ~40 years. Across multi-decade horizons, the tax-free compounding is often worth far more than the upfront deduction a Traditional contribution would have provided.

Tax brackets are uncertain

Predicting retirement tax brackets decades ahead is genuinely hard. Many planners suggest tax diversification (some Roth, some Traditional) so the household has flexibility across tax regimes in retirement.

Common Mistakes

❌ Choosing based on intuition without checking bracket math

A high earner in the 32% bracket gets a noticeably larger benefit from a Traditional deduction than a lower earner does. Running the bracket math is the first step, not a feeling about taxes.

❌ Missing the Roth income phaseout

Direct Roth contributions phase out at higher incomes. A backdoor Roth strategy is sometimes appropriate but adds complexity; a consult with a tax professional clarifies the right path.

Industry Benchmarks

Category	Good	Average	Poor
2024 Roth phaseout (single)	Well under $146,000	$146,000-161,000 partial	Over $161,000 (no direct)
Common Roth fit	12-22% current bracket	24% with rising expectation	32%+ unless dynamics are special
Common Traditional fit	32-37% current bracket	24% with falling expectation	12% unless retiring next year

Source: IRS Retirement Topics, Investment Company Institute IRA Investor Database, and 2024 contribution and phaseout schedules

Benchmark data sourced from IRS Retirement Topics, Investment Company Institute IRA Investor Database, and 2024 contribution and phaseout schedules.

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One of the most common mistakes we see when working with clients: choosing based on intuition without checking bracket math. A high earner in the 32% bracket gets a noticeably larger benefit from a Traditional deduction than a lower earner does. Running the bracket math is the first step, not a feeling about taxes.

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Frequently Asked Questions

What is the main difference between a Roth and a Traditional IRA?

Traditional IRA contributions are made with pre-tax dollars (if deductible) and grow tax-deferred; withdrawals in retirement are taxed as ordinary income. Roth IRA contributions are made with after-tax dollars; qualified withdrawals in retirement (including all growth) are tax-free. The decision usually comes down to whether you expect your tax rate now to be lower than in retirement.

Who is generally better suited to a Roth IRA?

Younger savers in lower current tax brackets typically benefit from Roth because they pay tax at a lower rate now in exchange for decades of tax-free growth. Roth also has no required minimum distributions during the original owner's lifetime, which provides estate-planning flexibility. This is general framework guidance, not personalized advice.

Are there income limits on contributing to a Roth IRA?

Yes. For 2024 the Roth contribution limit phases out for single filers between $146,000 and $161,000 of modified adjusted gross income, and for married filing jointly between $230,000 and $240,000. Above those bands, eligibility for direct Roth contributions disappears, though a backdoor Roth strategy is sometimes used. Rules change; check the current year limits.

Can I split contributions between Roth and Traditional?

Yes, in the same tax year you can split your annual IRA contribution between Roth and Traditional as long as you do not exceed the combined annual limit. Many planners use a split when the current and future tax brackets are uncertain, to diversify tax exposure in retirement.

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