The choice between a Roth IRA and a Traditional IRA is one of the most consequential financial decisions you'll make. Get it right, and you save tens of thousands in taxes. Get it wrong, and the IRS takes a big cut of your retirement savings.
Both accounts let your investments grow tax-deferred. The difference is when you pay taxes — and that timing gap can mean hundreds of thousands of dollars over a lifetime of saving.
What's the real difference between Roth and Traditional IRA?
It all comes down to when you pay taxes. With a Traditional IRA, contributions are tax-deductible today. You pay income tax when you withdraw in retirement.
With a Roth IRA, you contribute with after-tax dollars. All growth and withdrawals are completely tax-free.
Think of it this way: do you want to pay taxes on the seed or on the harvest? A **$1 million** Roth balance is truly yours. A **$1 million** Traditional IRA might be worth closer to **$780,000** after taxes, depending on your withdrawal rate.
Roth IRA contributions (not earnings) can be withdrawn at any time and any age, tax-free and penalty-free. This makes a Roth IRA a flexible emergency backup as well as a retirement account.
What are the 2026 Roth IRA contribution limits?
For 2026, the base contribution limit's **$7,500** per year if you're under 50. If you're 50 or older, you can add a catch-up contribution of **$1,100**, bringing your total to **$8,600**. These limits apply to combined contributions across all your IRA accounts — Roth and Traditional combined.
At **$7,500/year** with a **7%** return over 35 years, your contributions total roughly **$260,000** while your tax-free balance reaches well over **$1 million**. That's the Roth IRA's irreplaceable value proposition.
Compare Roth vs Traditional With Your Numbers
Enter your age, contribution amount, and tax rates to see the exact dollar difference between a Roth IRA and a Traditional IRA. Our calculator shows your tax-free balance, total contributions, and the tax savings vs. a taxable account.