Guide
Traditional vs Roth: Which Is Better for You?
The decision comes down to one question: will your tax rate be higher now or in retirement?
Traditional accounts give you a tax break today and tax you on withdrawal. Roth accounts are funded with after-tax dollars and grow completely tax-free.
The core rule
If your tax rate will be higher in retirement than it is now, Roth usually wins - lock in today's lower rate. If it will be lower, Traditional usually wins. When the rates are the same, the math is nearly identical.
Reasons Roth often makes sense
- You're early in your career in a low bracket.
- You expect tax rates to rise.
- You value tax-free, RMD-free flexibility (Roth IRAs have no lifetime RMDs).
Reasons Traditional often makes sense
- You're a high earner in your peak years.
- You expect to spend less (and drop a bracket) in retirement.
- You want the deduction to free up cash to invest now.
Many people hedge by splitting contributions. The right mix is personal - run your own numbers.
Put it into numbers: compare Traditional vs Roth side by side.