Roth vs Traditional: Which Should You Pick?
Roth or traditional? Pay tax now or later. The break-even on your current vs retirement tax rate, RMDs, 2026 limits, and who should pick which, with a calculator.
Roth and traditional accounts hold the same investments. The only difference is when you pay tax: now with Roth, or in retirement with traditional. The winner is whichever rate is lower, so the whole decision comes down to your tax rate today versus your expected rate later.
Quick answer
Lean Roth when your current marginal rate is at or below your expected retirement rate, which usually means lower earners and early-career savers (10-12% bracket). Lean traditional when your current rate is high and likely to fall in retirement (32%+ bracket). In the broad middle (22-24%), split contributions and let tax diversification adapt to a future you cannot forecast.
| Roth | Traditional | |
|---|---|---|
| Tax now | Pay at your current rate | Deduct now; save at your current rate |
| Tax in retirement | Withdrawals are tax-free | Withdrawals taxed as ordinary income |
| Wins when | Retirement rate >= current rate | Retirement rate < current rate |
| RMDs | None for the original owner | Required starting at age 73 |
| 2026 IRA limit | $7,500 (+$1,100 if 50+) | $7,500 (+$1,100 if 50+) |
| 2026 401(k) limit | $24,500 (+$8,000 if 50+) | $24,500 (+$8,000 if 50+) |
| State-tax arbitrage | Locks in today's state rate | Can defer into a lower- or no-tax state later |
| Best used as | Part of a Roth + traditional + taxable mix | Part of a Roth + traditional + taxable mix |
IRS contribution limits for 2026. Tax treatment per current IRS rules.
Run your own break-even
The decision hinges on two rates you control or can estimate. This calculator compares the after-tax outcome of each at your current and expected retirement rates, so you can see which side your situation falls on.
Who should pick which
Lean Roth if you
- Are in a 10-12% bracket or early in your career.
- Expect higher income or higher rates later.
- Want to avoid RMDs and leave tax-free money to heirs.
Lean traditional if you
- Are in a 32%+ bracket at peak earnings.
- Expect a lower rate in retirement.
- Plan to retire to a lower-tax state.
The full reasoning
For the detailed tax math, the role of tax diversification, and the mistakes that trip people up, read Roth vs. Traditional 401(k) and IRA: The Tax Math That Actually Matters.
Want to see how this fits your whole portfolio?
Summitward turns portfolio, tax, and life-planning tradeoffs into decisions you can act on, including overlap, concentration, and tax-location analysis across your accounts.